Explanation:

 Correct option: (a) Explanation:  Statement 2 is incorrect: In outcome based budgeting, the outcomes of programmes are measured not just in terms of Rupees but also in terms of physical units like Kilowatt of energy produced or tonnes of steel produced. Supplementary notes: Outcome based budgeting  Outcome based budgeting is a practice of suggesting and listing of estimated outcomes of each programmes or schemes designed.  An interesting feature of outcome based budgeting is that the outcomes of programmes are measured not just in terms of Rupees but also in terms of physical units like Kilowatt of energy produced or tonnes of steel produced. Also outcomes are expressed in terms of qualitative targets and achievements to make the technique more comprehensive.  Under outcome budgeting, each Ministry presents a preliminary Outcome Budget to the Finance Ministry, which is responsible for compiling them.  Outcome budget is a performance measurement tool that helps in:  Better service delivery  Decision-making  Evaluating programme performance and results  Communicating programme goals  Improving programme effectiveness  Make budgets cost effective  Fix accountability  Aid better scheme management  Outcome budgeting makes government programmes more result oriented, instead of outlay oriented. Under outcome budgeting, the document shows physical dimensions of the fi nancial budget indicating the actual physical performance in the previous year, current year and targeted performance during the projected (next) year.  From 2007-08 onwards, the previous Performance Budget was merged with Outcome Budget. There was only one document i.e. the Outcome Budget. All Ministries have to prepare outcome budgets to make the budgeting target oriented.