Presentation on budget for training of personnels of regional ceentres

2. • Annual Financial Estimates known as
‘Budget’, present under different heads the
estimated receipts and expenditure of the
University in respect of a financial year,
before the commencement of that year
• The Budget specifies the objects for and
the limits up to which expenditure may be
incurred during the financial year
BUDGET

3. Parts of the Budget
• The budget estimates shall be prepared in
accordance with the provisions of the Act,
Statutes and other instructions
• The Budget is broadly divided into four parts
 Non-Plan
 Plan
 Earmarked
 Debt, Deposits, Advances

4. •Non-Plan : The receipts and expenditure
connected with normal operational and
maintenance part. It is mostly recurring in
nature
•Plan : The receipts and expenditure on
development activities
•Earmarked : The receipts and expenditure
for specific purposes
•Debt, Deposits, Advances : The receipts,
and expenditure relating to Debt, Deposits &
Advances

5. Budgeting in Govt
•Budgeting system among governments over the
year has undergone changes and new approaches
to Budgeting have been evolved
•Budgeting is a constitutional requirement under
Article 112. Annual Financial statement showing
estimated receipts and expenditure of Govt of
Indian for the coming year has to be placed before
the Parliament
•Demands for Grants, one for each Ministry
under Article 113 is to be presented to the Lok
Sabha

6. •In IGNOU, under statute 11(6), the financial
estimates of the University shall be laid
before the Finance Committee for
consideration and comments, and thereafter
submitted to the Board of Management

7. BUDGETARY REFORMS
•With heavy investment on developmental
activities and greater emphasis on planning,
Budgeting is a tool of planning and
control. Must lay down targets to be
acheived over a period
•The public must know the end use of the
money spent
•Executive head of an organisation has to
supervise and ensure carrying out of the
activities as planned

8. •Necessitated application of management
concept to budgeting and planning of
activities to see budgets are drawn not only
in terms of money but also lay down the
Programme and activities
•Planning in terms of programmes and
activities and linking these to the financial
requirements is known as Performance
Budgeting
•This was first recommended by the Hoover
Commission in the USA in1949 and later by
Administrative Reforms Commission in India

9. •As a step to control the growth of public
expenditure the FM announced that Z B B
would be used for the fiscal year 87-88
•Z B B does away with incrementalism and
adoption of previous year as basis of
budget. It analyses issues –
 Are the current activities efficient and
effective?
 Should the current activities be
eliminated or reduced to fund higher
 priority new programmes?

10. WHY BUDGET
Budget is both a planning and control
device and is a continuous process. It is
involves -
•Control Mechanism
 Setting targets for achieving objecting
and laid out plans
 Recording the actual transactions i.e.,
accounting & record keeping
 Comparison of targets and actuals and
arriving at variances

11. Taking corrective actions for the
variances and laying down responsibility
to avoid such deviation in future
•Budgets is a device for allocation of scare
resource to various activities and is an
instrument of authorisation
•A planning tool – as an instrument that
operationalises the plan and lays down the
path to be followed for achievement of
objectives

12. PURPOSE OF BUDGETS
Several purpose which are related to each
other
•It incorporates an organisation’s plans
•It provides motivation by means of targets
built into them
•It contains means for self evaluation for
those responsible for budget centres

13. Phases of Budgeting
Three Phases
•Formulation – of Budget at various
Divisions/Schools/RCs/Centres
•Finalisation - Discussion and approval by
the Authorities
•Review & Control – Periodical comparison
of budget with actuals to see how far the
targets envisaged have been achieved or
what are the short falls so as to take
corrective action

14. Budgeting Process
Budgeting as a process of planning resource
allocation and control has to be linked with
organisational objectives and organisational
structure. It entails
•Define organisational objectives
•Identify organisational structure i.e.
responsibility centres or decission unit
•Develop and finalise programmes or
activities for each responsibility centre

15. •Lay down targets in Physical and financial
terms i.e., the outcome
•Evolve a system of execution and record
keeping
•Review and control - have periodic review
by comparing actuals with the budgeted
targets both in physical and financial terms
and see variances

16. Budget Process
Organizational
Structure
Develop
Programmes
Develop Physical
Targets & Resou-
rces involvement
Execution &
Record Keeping
Review & Control
Objectives

17. TYPES OF BUDGET
•Traditional Budget – It is also known as
Conventional Budget or line item Budget or
Object-wise Budget
This year’s Budget = Last year’s
Budget+New Activity+Inflation
Accomplishment – Nil
•Performance Budget – It emphasises on
the classification of the functions,
programmes and the activities

18. Measurement of performance is done by
laying down standards
•Zero Base Budget (ZBB) - the objective
of ZBB exercise is to optimise the cost of
governance by making the public
expenditure more effective and need based
•Outcome Budget – Outcome budget
requires ‘outcome’ defined in measurable
and monitor able terms and ensure flow of
right amount of money at right time to the
right level. It is having effective monitoring
and evaluation system. It also changes the
mindset to more result oriented

19. Z B B Process
•The formulation of a zero-base budget
consists of the following steps :
 It requires identification and sharpening
of objectives
 Examination of various alternatives
through cost benefit and cost
effective analysis
 Prioritisation of objectives and
programmes

20.  Switching of resources from programmes
with lower priority to those with higher
priority
 Identification and examination of
programmes which have outlined their
utility

21. Outcome Budget
•Outcome Budget is an exercise to convert
‘Outlays’ into ‘outcome’ or how effectively
each rupee is spent
•The outcome Budget measures the
development outcomes of programmes
•Develops linkage between money spent
and the result which follows
•It converts financial outlays into physical
outcomes – measurable and monitorable
targets

22. •Cost effective
•Focus not on money spent but on result of
the money spent
•Outcome Budget is used as an important
tool for effective management of
programmes and towards accountability
•In India outcome Budget was adopted
during 2005-06 for Plan schemes and was
presented on August 25, 2005