Topic: Budget
                                        1Co)   ncept  
                                        2Si) gnificance of Budget
                                        3T)ypes of Budgeting 
                                        4Bu)   dget Policy Orientations in India
                                        5M) ajor Actors in Budgetary Process in India
                                        6Bu)   dget Cycle I India
     Budget
     • Budgeting is concerned with allocating limited resources to problems that governments and other public 
      organisations face. Budget refers to the estimated receipts and expenditure of the government. 
     • The word “budget” is derived from a French word “bougette” which means a Leather bag or sack. Budgeting 
      is the heart of financial administration Leroy Beaulieo defines budget as ‘a statement of the estimated receipts 
      and expenses during a fixed period’. According to Remo Storm it is ‘a document containing a preliminary 
      approval plan of public revenue and expenditure. 
     •   the budget is a plan of action and manifests the programme of the chief executive for the ensuing financial 
      year. It is an instrument through which the several operations are correlated, compared and examined at one 
      and the same time. The real significance of the budget system lies in providing for the orderly administration 
      of  the  financial  affairs  of  a  government.  It  is,  thus,  much  more  than  a  mere  statement  of  revenue  and 
      expenditure of the government. 
     Significance
     • Budget is one of the major instruments for the expression of a government’s programme. It has a vital role to 
      play in the economy of a welfare state. Through a budget, citizens are benefited from various plans and 
      programmes of the government. The government tries to narrow down the class distinctions and inequalities 
      through its taxation policy. 
     • The budget policy of the government aims at removal of poverty, unemployment,  social and economic 
      inequalities  in  society.  By  imposing  heavy  taxation  upon  articles  of  consumption,  it  can  encourage 
      investment,  and  thus,  promote  the  economic  growth  of  the  nation.  By  taxing  the  rich,  it  can  mitigate 
      economic inequality. The signs of the welfare state are reflected in the budget with its heavy outlay on social 
      services and the like. In this way, it is an instrument of socioeconomic change.
     • Budget also acts as an allocator of social resources. Because people cannot always acquire all goods and 
      services that they need for themselves; they must rely on others for help. It is the government which allocates 
      society’s resources by mandating that taxes be collected and then by deciding where those taxes are spent. 
      Governmental allocations are necessary because the market mechanism is not adequate to serve all societal 
      needs.
     • Budgeting  is  the  heart  of  administrative  management.  It  serves  as  a  powerful  tool  of  coordination,  an 
      effective device of eliminating duplication and wastage. 
     • The budget is many things-an economist view it as a device of influencing the country’s economy, the 
      politician employs it for defending or criticizing the government, the administrator uses it as a framework for  
      communication  and  coordination  as  well  as  for  exercising  administrative  discipline  throughout  the 
      administrative structure.   
     Types of Budget
     The  objectives  of  all  budgets  include  regulating  unnecessary  government  spending  and  waste.  However, 
     different types of budgets vary in their spending provisions. 
     • Line-item Budget: this  is  the  earliest  system  of  budgeting  which  was  designed  to  control  governmental 
      expenditure and activities. A line-item budget is simply the allocation of resources according to the cost of 
      each item, from paperclips to personnel, used by a governmental agency. It operates on a pay-as-you-go basis 
      and is designed to reveal exactly how much has been spent on what. 
     • Performance Budgeting: performance budgeting a narrative describing an agency’s work in progress, and 
      accomplishments and aims to provide policy-makers with data for measuring work-load and activity costs 
      and to tell the public whether they are getting their money’s worth. The idea behind performance budgeting is 
      that  how  much  you  spent  on  department  x  is  tied  directly  to  how  well  department  x  is  performing. 
      Performance budgeting requires the establishment of performance levels and the collection of information 
      that tells weather those performance levels have been met.
     • Planning, programming and budgeting system: Planning, programming and budgeting system (PPBS) emerged as 
      a reaction to the unscientific and disjointed planning in preparing the budget. PPBS evaluates policy by dividing it 
      into separate programmes and quantifying their gains and losses. A basic element of programme budgeting-cost-
      benefit analysis-systematically weighs the cost of a project against the amount of benefit-in terms of money or 
      material saved or earned-that an agency or department can expect in return. 
     • Zero-based budgeting: the zero-based budgeting (ZBB) is the allocation of resources to agencies on the basis of 
      those agencies periodically re-evaluating the need for all of the programmes for which the agency is responsible 
      and justifying the continuance or termination of each programme in the agency budget proposal. This leads the 
      allocating  agencies  to  warn  such  funding  schemes  which  are  sick  or  irrelevant  to  the  ground  realities  of 
      socioeconomic life. 
     • Gender Budgeting: it is process that entails incorporating a gender perspective at various stages of budgeting, that 
      is, planning, policy formulation, assessment of needs of target groups, allocation of resources, implementation, 
      impact assessment, and repriorotization of resources. The main objective of gender budgeting is to bring out a  
      gender-responsive budget. Gender budgeting is understood as a dissection of the government budget to establish 
      its gender-differential impacts to translate gender commitments into budgetary comitments.