Memorandum on the Introduction of Performance Budgeting in India

Abstract

The 1966 memorandum by the Development Administration Unit of the Planning Commission underscores the necessity of introducing performance budgeting in India to address the limitations of traditional financial-focused budgeting amid rising public expenditures and increasingly complex government operations. Performance budgeting is presented as a dual-purpose tool that links expenditures to measurable outputs, clarifies administrative responsibilities, and integrates planning with financial management, thereby enhancing accountability and transparency. Drawing on historical experiences from the United States and early Indian recommendations from the 1950s, the memorandum emphasizes classifying governmental functions, programs, and activities to evaluate outcomes against resources utilized. The document highlights practical challenges in implementation, including procedural adjustments, organizational restructuring, and adaptation from conventional practices, while recommending a phased rollout starting with pilot projects, personnel training, and potential reforms in accounting systems. By tying funding requests to programmatic achievements and fostering executive-legislature collaboration, performance budgeting aims to improve resource allocation, service delivery, and overall governmental efficiency, forming a crucial mechanism for aligning financial planning with India’s developmental objectives.