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4) What do you understand by Outcome budget? How is it different from performance budget? Explain.(250 words)

Topic : Government Budgeting.

4) What do you understand by Outcome budget? How is it different from performance budget? Explain.(250 words)

Indian polity by Lakshmikanth


Why this question:

The question is to evaluate – outcome budget, performance budget.

Key demand of the question:

The answer must provide for a detailed discussion on the two type of the budget namely – outcome budget and performance budget, provide for a comparison and contrast the two.

Directive word:

Explain – Clarify the topic by giving a detailed account as to how and why it occurred, or what is the particular context. You must be defining key terms where ever appropriate, and substantiate with relevant associated facts.

Structure of the answer


write a few introductory lines about the significance of a Budget.


Answers must discuss the following aspects :

  • What is an Outcome Budget? – It is a progress card on what various Ministries and Departments have done with the outlays in the previous annual budget. It measures the development outcomes of all government programs and whether the money has been spent for the purpose it was sanctioned including the outcome of the fund usage.
  • It is a means to develop a linkage between the money spent by a government and the results which follow.
  • An interesting feature of outcome based budgeting is that the outcomes of programmes are measured not just in terms of Rupees but also in terms of physical units like Kilowatt of energy produced or tonnes of steel produced. Also outcomes are expressed in terms of qualitative targets and achievements to make the technique more comprehensive.
  • Then move on to discuss the procedure for outcome-based budgeting.
  • Then explain what is a performance budget? – A performance budget is a budget that reflects the input of resources and the output of services for each unit of the government. This type of budget is commonly used by government bodies to show the link between taxpayer funds and the outcome of services provided by federal, state, or local governments.
  • Provide for merits and demerits of the two.

Conclusion –

Conclude by reasserting their significance.