Which one among the following reports states that the budget is seen, not as a simple balancing of tax receipts against expenditure but as a sophisticated process in which instruments of taxation and expenditure are used to influence the course of the Economy?

Correct — D, Plowden Report on Control of Expenditure. The Plowden Committee reported to the British Treasury in 1961 on the control of public expenditure, and the passage quoted in the stem is its central idea: a budget is not an accounting exercise that balances receipts against spending but an instrument of economic management, in which tax and expenditure decisions are used deliberately to steer output, employment and prices. It is the report that produced the Public Expenditure Survey Committee system, under which spending was projected over several years against expected resources instead of being fixed one year at a time.

• (a)Administrative Reforms Committee Report — India's Administrative Reforms Commissions, of 1966 and 2005, addressed machinery of government, personnel, centre-state relations and citizen-facing reform. Neither produced this statement about the budget as an instrument of economic policy.
• (b)Hoover Commission Report — The two Hoover Commissions in the United States, in 1949 and 1955, were about reorganising the executive branch. Their budgetary contribution is performance budgeting — classifying spending by function and activity — not the idea quoted here.
• (c)Haldane Committee Report — The Haldane Committee of 1918 examined the machinery of government in Britain and recommended organising departments by the service they render rather than by the persons they serve. It predates the macroeconomic view of budgeting by four decades.

Budgeting theory has moved through recognisable stages. A traditional line-item budget is a control device that matches receipts to authorised spending. Performance budgeting, associated with the Hoover Commissions, reclassifies spending by function and activity to show what is being bought. The Plowden report belongs to a later stage in which the budget is treated as the government's principal tool of economic management, so decisions on taxation and expenditure are judged by their effect on the economy as a whole.

Three of the four options can be dated away without knowing the quotation. Haldane sits in 1918, well before demand management entered official budgeting; Hoover is American and is remembered for executive reorganisation and performance budgeting; the Administrative Reforms Commission is Indian and is not a budgeting report at all. The Plowden report of 1961 is the only one of the four written about the control of public expenditure as such, and its title says so.

• The Plowden Committee reported on the control of public expenditure in Britain in 1961.
• It produced the Public Expenditure Survey Committee system of multi-year expenditure projection.
• The Haldane Committee, 1918, dealt with the machinery of government and departmental organisation.
• The Hoover Commissions, 1949 and 1955, are associated with performance budgeting in the United States.
• India's first Administrative Reforms Commission was set up in 1966 and the second in 2005.

• Reading Hoover as the source of every budgeting innovation; its contribution is performance budgeting.
• Assuming an Indian question must have an Indian answer.
• Confusing the Haldane Committee of 1918 with the later Fulton Committee on the civil service.

A quotation attributed to one of four reports, solvable by matching the subject matter of each report rather than by recognising the sentence.

No directly related past PYQ was found.

• practice — not a real PYQ

  Performance budgeting, which classifies government spending by function and activity, is most closely associated with

  • (a)The Plowden Report
  • (b)The Hoover Commission
  • (c)The Haldane Committee
  • (d)The Fulton Committee

  Answer(b) The Hoover Commission — its work in the United States popularised performance budgeting.

• practice — not a real PYQ

  The Haldane Committee of 1918 is remembered for recommending that government departments be organised on the basis of

  • (a)The persons or classes to be dealt with
  • (b)The service to be rendered
  • (c)The territory to be administered
  • (d)The revenue to be collected

  Answer(b) The service to be rendered — Haldane preferred organisation by service over organisation by clientele.