Rule 54 of The General Financial Rules 2017 Outcome Budget
Original Rule Text
Visual Summary
Links outlays to outputs/outcomes.
Outputs must be quantifiable.
Scheme continuation and budget.
Executive Summary
Rule 54 of the General Financial Rules, 2017, introduces the concept of an Outcome Budget. This rule mandates that after budgetary allocations are finalized, the Department of Expenditure, in collaboration with NITI Aayog and relevant Ministries, must prepare a statement that explicitly links financial outlays for each scheme or project to its expected outputs and medium-term outcomes. A crucial aspect is that these outputs and deliverables must be defined in measurable and quantitative terms, based on pre-decided parameters and projections from the Medium-Term Expenditure Framework (MTEF) Statement. The rule emphasizes that allocations are tied to a firm set of deliverables, and the actual performance against these specified outcomes will directly influence decisions regarding the continuation of a scheme and the quantum of its future budget allocation.
In-Depth Analysis of the Rule
Rule 54 marks a significant shift towards performance-based budgeting within the Indian government. It moves beyond simply tracking expenditure to focusing on the tangible results and impacts of public spending. This rule aims to enhance accountability, transparency, and efficiency in financial management by establishing a clear link between financial inputs and desired societal outcomes.
Breakdown of the Rule:
- Outcome Budget Statement: This is the core requirement, a document prepared by the Department of Expenditure, NITI Aayog, and concerned Ministries.
- Linking Outlays to Outcomes: The statement must explicitly connect the financial resources allocated to each scheme or project with its intended outputs (immediate results) and medium-term outcomes (broader impacts).
- Measurable Deliverables: A key mandate is that all outputs and deliverables must be expressed in quantifiable terms. This requires setting clear, objective parameters in advance.
- Basis for Projections: These measurable targets are to be based on projections outlined in the Medium-Term Expenditure Framework (MTEF) Statement.
- Firm Deliverables: Budgetary allocations are contingent upon a firm commitment to achieving a predefined set of deliverables.
- Performance-Based Decisions: The actual performance against these specified outcomes will be the primary factor in deciding whether a scheme continues and how much budget it receives in the future. This introduces a strong incentive for effective implementation.
Practical Example:
Consider a government scheme aimed at improving rural literacy. Under Rule 54, instead of just allocating funds for “rural education,” the Outcome Budget would specify measurable deliverables like “increase literacy rate by 10% in target districts within 3 years” or “enroll 50,000 out-of-school children in primary education.” The continuation of funding and the amount allocated in subsequent years would then depend on the actual progress made towards these specific, quantifiable targets, rather than merely the amount of money spent.
Related Provisions
Rule 54 is part of a broader framework for financial management. Other relevant rules include:
- Rule 43 of The General Financial Rules, 2017 (Presentation of Budget to Parliament): Outlines the process of laying the Annual Financial Statement before Parliament.
- Rule 50 of The General Financial Rules, 2017 (Expenditure Estimates): Details the preparation of expenditure estimates, distinguishing between charged and voted, and revenue and capital accounts.
- Rule 53 of The General Financial Rules, 2017 (Acceptance and Inclusion of Estimates): Describes the scrutiny and finalization of estimates by the Ministry of Finance.
Learning Aids
Mnemonics:
- Outcome Budget: Outlays Bind Outcomes.
- Measurable Expectations Tie Expenditure Forward. (MTEF)
Process Flowchart:
Multiple Choice Questions (MCQs)
1. According to Rule 54 of the General Financial Rules, 2017, who is primarily responsible for preparing the Outcome Budget statement?
- A) Ministry of Finance, Budget Division
- B) Department of Expenditure in consultation with NITI Aayog and concerned Ministries
- C) Comptroller and Auditor General of India
- D) Parliamentary Standing Committee
Show Answer
Correct Answer: B) Department of Expenditure in consultation with NITI Aayog and concerned Ministries
2. What is a mandatory requirement for outputs/deliverables in the Outcome Budget statement as per Rule 54 of the General Financial Rules, 2017?
- A) They must be qualitative and descriptive.
- B) They must be given in measurable/quantitative terms.
- C) They must be approved by the Cabinet.
- D) They must be based on historical data only.
Show Answer
Correct Answer: B) They must be given in measurable/quantitative terms.
3. The projections for measurable outputs/deliverables in the Outcome Budget statement are based on which document, according to Rule 54 of the General Financial Rules, 2017?
- A) Annual Financial Statement
- B) Economic Survey Report
- C) Medium-Term Expenditure Framework (MTEF) Statement
- D) Departmental Audit Reports
Show Answer
Correct Answer: C) Medium-Term Expenditure Framework (MTEF) Statement
4. What forms the basis for deciding on the continuation of a scheme and its budget allocation, as per Rule 54 of the General Financial Rules, 2017?
- A) The total financial outlay incurred.
- B) The political priority of the scheme.
- C) The performance against specified outcomes.
- D) Recommendations from the NITI Aayog only.
Show Answer
Correct Answer: C) The performance against specified outcomes.
5. Rule 54 of the General Financial Rules, 2017, requires allocations for each scheme/project to be against what?
- A) Flexible spending targets.
- B) A firm set of deliverables.
- C) Ad-hoc expenditure approvals.
- D) Unspecified future benefits.
Show Answer
Correct Answer: B) A firm set of deliverables.
Frequently Asked Questions
What is the primary objective of the Outcome Budget under Rule 54 of the General Financial Rules, 2017?
The primary objective is to link budgetary outlays directly to the measurable outputs and medium-term outcomes of government schemes and projects, thereby enhancing accountability and focusing on results rather than just expenditure.
How does performance against outcomes influence future budget allocations as per Rule 54 of the General Financial Rules, 2017?
The performance against the specified, measurable outcomes forms the fundamental basis for deciding whether a scheme will continue and what quantum of budget allocation it will receive in subsequent financial years. Strong performance can lead to continued or increased funding, while poor performance may lead to reconsideration or reduction.
Which entities are involved in preparing the Outcome Budget statement under Rule 54 of the General Financial Rules, 2017?
The Outcome Budget statement is prepared by the Department of Expenditure in consultation with NITI Aayog and the concerned Ministries.
Key Takeaways
- Rule 54 mandates the creation of an Outcome Budget, linking financial outlays to measurable outputs and outcomes.
- Outputs and deliverables must be quantifiable and based on the Medium-Term Expenditure Framework (MTEF).
- Performance against these specified outcomes directly determines the continuation and funding of schemes.
- This rule promotes greater accountability, transparency, and efficiency in government spending by focusing on results.
Conclusion
Rule 54 of the General Financial Rules, 2017, represents a forward-thinking approach to public financial management. By institutionalizing outcome-based budgeting, it compels government entities to define clear objectives and measure their success, ensuring that public funds are utilized not just efficiently, but effectively towards achieving tangible developmental goals. This shift from input-centric to outcome-centric planning is vital for good governance and sustainable progress.