Performance budget
Topic: Government Budget, Fiscal Policy and FRBM · NCERT: Beyond NCERT
Meaning
A performance budget shows spending by functions, programmes and activities (what the money will do), not only by items such as salaries or equipment (what the money buys). Each activity comes with physical targets, so actual results can later be checked against what was promised. It shifts attention from "how much was spent" to "what work was done". In India, the Administrative Reforms Commission recommended it in 1968.
Example
Take a rural roads programme. A performance budget would not just list money for wages and materials. It would state how many kilometres of road the money is meant to build that year. Parliament and auditors can then compare the kilometres actually built with the target.
Don't confuse with
- Outcome budget (India, 2005-06): this goes one step further. It links spending to outcomes, meaning the final benefit to people, such as better access to markets. A performance budget focuses on activities and targets, such as roads built.
- Zero-based budgeting: every item must be justified afresh from zero each year. It does not simply add to last year's figure.
Related concepts
- Subsidy
- Cash transfers
- Targeting errors
- JAM trinity
- Universal Basic Income
- Freebies
- Outcome budget
- Zero-based budgeting
- Gender budgeting
- Green budgeting