Reform Initiatives in the Budgeting System in India

Abstract

The paper examines three major aspects of reform initiatives in budgetary system in India, namely, (i) making the budget performance oriented, (ii) bringing in multi‐year perspective to expenditure planning, and (iii) establishing a rule based budget management system. The reform initiatives have provided basis to pursue further modifications to benefit from the changes. To achieve the intended objectives, the innovations should be accompanied by improvements in associated systems and processes. The performance orientation of the budgeting system requires developing credible performance information, integrating them in the budget decisions, and strengthening the performance management system. Second, the role of multi‐year expenditure planning for effective allocation of resources by countering the entrenched incrementalism in public budget has been acknowledged and the initial progresses need to be reinforced further to establish a credible MTBF system. Third, the desirable elements of next generation fiscal rules should be adopted to improve the effectiveness of the rule based budget management system.

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