Examine the need of multi-year budgeting in the context of India.

India has been facing many issues in budgetary resource allocation, budget preparation and implementation. Multi-year budgeting is one of the areas being discussed as a solution.

Pros of multi-year budgeting:

• Long term policy predictability.
• Reduced populism due to infrequent changes.
• Focus clear to private sector, hence investment increase.
• Foreign players attracted due to long-term gains.
• Ease in monitoring and completing targets through target-based allocation and fund release.
• Reduce ‘March Rush’ and inefficient expenses.

Cons of multi-year budgeting:

• Unable to incorporate dynamic year-on-year changes.
• Will become lacklustre due to long term gestation period.
• Implementation is challenging because of an entirely new concept.
• Government changes every 5 years in India hence predictability will be in danger leading to volatility.
• Policy formulation suffers because of yearly allocations being avoided.

Multi-year budgeting can be a prospective approach. However, there needs to be a pilot run and efficiency determination before bringing it at full scale. Randomized uncontrolled trials can be a way to try it on small scale.