Outcome Budget data raises questions on returns from government capex

The Outcome Budget or OOMF is meant to link government spending to measurable results, but near-identical targets across years highlight gaps in assessing returns on public investment

What does the government money buy? The answer comes from an often overlooked document presented as part of the Budget papers by the finance minister in Parliament. This is the Outcome Budget for every year or, to give its full name, the Output Outcome Framework for Schemes.

 

Outcome Budget aims to link spending with measurable results

 

For instance, if we wish to know the projected outcomes of the capital expenditure (capex) of Rs 12.2 trillion the minister will pump into sectors, this is the document to refer to. The idea is to commit the ministries to measurable outcomes for the year. But this is often not the way the data is presented.

 

Railways reforms highlight gaps between targets and outcomes

 

In 2021-22 (FY22), as part of the Indian Railways reforms, the finance ministry promised to ramp up investments in the sector in a big way. The Railways, in turn, promised to achieve two outcomes: to take freight loading to 3 billion tonnes (from about 1,200 million tonnes in FY21); and increase the average passenger train speed from 33 to 42 km per hour, both by FY30.

 

The Outcome Budget, or, to give its new name from this year, the Output Outcome Monitoring Framework (OOMF), states that freight throughput in FY27 will rise by less than 1 per cent (0.89 per cent) from FY26 levels of 1.055 billion tonnes. The Railways have, in fact, regressed since FY24. The total freight throughput for that year was far higher at 1.59 billion tonnes. The candour shown by the OOMF is welcome, with the data highlighting that the impact of the massive investments made in the Railways is taking longer than anticipated to improve the efficiency of the state-run transporter.

 

Similar targets across years point to weak outcome measurement

 

The presentation of the data possibly shows why the slow pace persists. The OOMF chapter on the Ministry of Railways for FY26 and FY27 has several entries running almost unchanged. For instance, the entry for “number of coaches operationalised” is 9,343 for FY26 and 9,000 for FY27. Similarly, on safety, the “number of manned level crossings removed” and the “number of ROB/RUBs (rail over bridge/rail under bridge) constructed” are identical at 900 and 1,100, respectively, for both years. So also is the number of “projects commissioned during FY” at 330 and 326 for both years. Again, while FY27 will see a higher pace of bridge works, nearly double that of FY25, the net effect on speed controllers, or, in railway parlance, the “number of speed restrictions removed from tracks”, will be almost identical at 12 and 10, respectively.

 

Highways data mirrors the same pattern

 

The near-similar placement of data is even more pronounced in the Ministry of Road Transport and Highways, the other big-ticket capex expenditure item for the finance ministry. As the table shows, the numbers are identical even for minor items such as the “removal of black spots on NHs (national highways)”, at 1,000. The congruence is more stark for bigger line items such as “public-private partnership contracts awarded as a per cent of total awarded length in the current FY”, which stands at 30 per cent for both years.

 

Framework lacks insight into return on investment

 

Other than the change of name, as the finance ministry has noted, there is no revision in the presentation of data in the OOMF over the years.

 

The document mentions that the operational metrics to measure outcomes will be (a) the financial outlay; (b) clearly defined output and outcome statements; (c) measurable output and outcome indicators; and (d) specific output and outcome targets. While the intent behind the document is to enhance transparency, predictability and ease of understanding of the government’s development agenda, it does not answer the key question: What is the rate of return on investment (ROI) on government outlays?