Challenges and Drawbacks of Programme Budgeting

Programme budgeting is usually taught as one of the more “rational” tools in the budgetary control toolkit. Instead of handing out money by department or by expense head, it ties every rupee to a specific programme, objective, or outcome. On paper, that sounds like an upgrade over old-style line-item budgeting. In practice, government departments, universities, and even large NGOs that have tried it will tell you it comes with a fairly long list of headaches. Understanding these drawbacks is just as important as understanding the concept itself, especially if you are answering exam questions or evaluating budgeting systems in a case study.

A quick recap of what programme budgeting actually does 🔗

Programme budgeting groups expenditure around programmes or schemes rather than around departments or object heads like salaries and travel. Each programme is expected to have a defined objective, a set of activities, and measurable outputs and outcomes. In India, this idea evolved through performance budgeting and later into outcome budgeting, where every major central scheme is now expected to report physical and financial progress against pre-set targets under the Output-Outcome Monitoring Framework.

It is a good idea in theory. Money follows purpose, and decision-makers can, at least conceptually, see what a scheme is achieving rather than just what it is spending. The problems begin when this idea meets real administrative machinery.

It is time-consuming and extremely data-intensive 🔗

Building the programme structure itself is a project 🔗

Before a rupee can be allocated, someone has to define the programme, break it into sub-programmes, set output indicators, set outcome indicators, and fix realistic targets. This is not a one-time exercise either. Departments have to keep collecting data through the year to track progress against these targets, verify it, and feed it back into the next budget cycle. Government efforts to institutionalise this kind of outcome monitoring across dozens of ministries have taken years of dedicated work, which gives a sense of how demanding the process is even with an entire agency behind it.

Small organisations feel this pressure the most 🔗

A large ministry can afford a dedicated monitoring cell. A smaller department, a college, or a mid-sized NGO usually cannot. For them, the same data requirements mean pulling staff away from actual programme delivery just to keep the paperwork current. The budgeting exercise starts eating into the time meant for the work it is supposed to support.

It can push costs up instead of bringing them down 🔗

One of the ironies of programme budgeting is that a system designed to improve efficiency can end up increasing administrative costs if it is not implemented carefully. Setting up monitoring systems, training staff to collect and interpret data, and running periodic evaluations all cost money. Analysts tracking India’s move toward outcome-based budgeting have pointed out that linking funds too tightly to performance metrics can itself generate additional costs, particularly when departments over-invest in measurement systems without a corresponding improvement in decision-making. If the benefits of better allocation do not outweigh these added compliance costs, the whole exercise becomes a net loss rather than a saving.

Programmes start overlapping with each other 🔗

Why duplication creeps in 🔗

Programme budgeting works cleanly when each programme is a neat, self-contained box. Real government and organisational structures rarely work that way. Different departments often chase similar goals for overlapping beneficiary groups, simply because coordination between them is weak. Public policy researchers studying India’s ministries note that siloed functioning frequently leads to policy overlaps and inconsistencies, with ministries designing schemes without full visibility into what a neighbouring department is already doing.

What this does to the budget 🔗

When two or three programmes are quietly funding similar activities, the same rupee of public benefit ends up being counted, and paid for, more than once. Reviewing and rationalising these overlaps later is far more expensive than avoiding them at the planning stage, and it undermines the very case for efficiency that programme budgeting is supposed to make.

Performance evaluation gets harder, not easier 🔗

Too many administrative layers touch one programme 🔗

A single scheme in India typically passes through a central ministry, a state department, a district implementing agency, and a field office before it reaches a beneficiary. Each layer adds its own reporting format, its own timelines, and its own interpretation of the targets. Trying to build one consolidated performance picture out of this is genuinely difficult. Commentary on India’s budget reform process has argued that strengthening the link between allocations and results is worth the effort precisely because it is currently so hard to pin down which layer of the system is actually responsible for a given outcome.

Outcomes are simply harder to measure than outputs 🔗

It is easy to count how many training sessions were held or how many kilometres of road were built. It is much harder to measure whether those activities actually improved employability or reduced travel time in a meaningful way. Public sector budgeting specialists point out that without strong underlying data, active stakeholder engagement, and disciplined change management, outcome-focused budgeting can introduce subjectivity and internal resistance rather than clarity. Evaluators end up disagreeing over whether a target was really met, which defeats the purpose of having measurable indicators in the first place.

Other drawbacks worth knowing for your exams 🔗

Weak ownership at the political or leadership level 🔗

Programme budgeting needs consistent backing from decision-makers over several budget cycles to work well. When that backing is missing, or when leadership changes shift priorities every year, the system loses momentum. This lack of sustained ownership has been flagged as one of the recurring weaknesses of outcome-based approaches, even in systems that are technically well designed on paper.

Resistance from within the organisation 🔗

Staff who are used to a simple, input-based way of working often see programme budgeting as extra scrutiny rather than a helpful tool. This resistance is not irrational. It usually comes from genuine concerns about being judged on outcomes that depend on factors outside their control, such as weather, market conditions, or decisions made by another department entirely.

A quick summary 🔗

None of this means programme budgeting is a bad idea. It has genuinely improved transparency in how public money is tracked in India, and it forces departments to think about objectives rather than just expenditure heads. The point is that it is not a plug-and-play solution. It needs strong data systems, coordination between departments, and patient, consistent leadership to actually deliver on its promise. Without these, it can end up costing more, taking longer, and confusing accountability rather than sharpening it.

What do you think? If you were designing a programme budget for a college or a small NGO, which of these drawbacks would worry you the most, the cost of setting up the system or the risk of overlapping programmes? And do you think the answer would change for a large central ministry running dozens of schemes at once?

References

1. https://www.iipa.org.in/cms/public/uploads/468111658403932.pdf
2. https://dmeo.gov.in/sites/default/files/2024-01/Best-Practices-Compendium-on-Outcome-Budgeting.pdf
3. https://www.pmfias.com/outcome-budgeting/
4. https://www.ispp.org.in/strengthening-public-policy-and-governance-through-government-ministries/
5. https://idronline.org/article/advocacy-government/how-to-link-budget-allocations-to-results-more-effectively/
6. https://envisio.com/blog/the-advantages-and-disadvantages-of-priority-based-budgeting/