Answer:

Budgeting is an annual government exercise of estimating receipts and expenditures for the coming year. Accordingly, outlays are assigned to various ministries and government schemes on the basis of estimated output or outcome.

Under ‘Outcome-based Budgeting’, outcomes of each programme or scheme designed by the government is estimated. These Outcomes are the end results or impact of initiatives and interventions. Here Output must be differentiated from Outcome, as the former deals with quantitative result while the latter also includes qualitative aspect.

For instance, if outlay of 100 Crore is assigned for construction of hospital, then the ‘output’ would be measured in terms of physical infrastructure, whereas ‘outcome’ will also include the impact of the initiative, like percentage reduction in death rate, maternal mortality rate in that area among other parameters.