- Performance Budgeting
A performance budget reflects the goal/objectives of the organization and spells out its performance targets.
These targets are sought to be achieved through a strategy. Unit costs are associated with the strategy and allocations are accordingly made for achievement of the objectives.
A Performance Budget gives an indication of how the funds spent are expected to give outputs and ultimately the outcomes.
However, performance budgeting has a limitation – it is not easy to arrive at standard unit costs especially in social programmes, which require a multi-pronged approach.
2. Zero-based Budgeting
The basic purpose of ZBB is phasing out of programmes/activities, which do not have relevance anymore. ZBB is done to overhaul the functioning of the government departments and PSUs so that productivity can be increased and wastage can be minimized. Scarce government resources can be deployed efficiently. Therefore, Zero Based Budgeting is followed for rationalization of expenditure.
The concept of zero-based budgeting was introduced in the 1970s. As the name suggests, in the process every budgeting cycle starts from scratch.
Unlike the earlier systems, where only incremental changes were made in the allocation, under zero-based budgeting every activity is evaluated each time a budget is made and only if it is established that the activity is necessary, funds are allocated to it.
Under the ZBB, a close and critical examination is made of the existing government programmes, projects and other activities to ensure that funds are made available to high priority items by eliminating outdated programmes and reducing funds to the low priority items.
Governmental programmes and projects are appraised every year as if they are new and funding for the existing items is not continued merely because a part of the project cost has already been incurred.
3. Programme Budgeting
Programme budgeting aimed at a system in which expenditure would be planned and controlled by the objective. The basic building block of the system was classification of expenditure into programmes, which meant objective-oriented classification so that programmes with common objectives are considered together.
- Programme and Performance Budgeting System (PPBS)
PPBS went much beyond the core elements of programme budgeting and was much more than the budgeting system. It aimed at an integrated expenditure management system, in which systematic policy and expenditure planning would be developed and closely integrated with the budget. Thus, it was too ambitious in scope.
Neither was adequate preparation time given nor was a stage-by-stage approach adopted. Therefore, this attempt to introduce PPBS in the federal government in USA did not succeed, although the concept of performance budgeting and programme budgeting endured.
Many governments today use the “programme budgeting” label for their performance budgeting system. As pointed out by Marc Robertson, the contemporary influence of the basic programme budgeting idea is much wider than the continuing use of the label. It is defined in terms of its core elements as mentioned above. Programme budgeting is an element of many contemporary budgeting systems which aim at linking funding and results.
- Outcome Budget
The Outcome Budget is a progress card on what various ministries and departments have done with the outlay announced in the annual budget.
It is a performance measurement tool that helps in better service delivery; decision-making; evaluating programme performance and results; communicating programme goals; and improving programme effectiveness.
The Outcome Budget is likely to comprise scheme- or project-wise outlays for all central ministries, departments and organizations during 2005-06 listed against corresponding outcomes (measurable physical targets) to be achieved during the year.
It measures the development outcomes of all government programmes. The Outcome Budget, however, will not necessarily include information of targets already achieved.
This method of monitoring flow of funds, implementation of schemes and the actual results of the usage of the money is followed by many countries.
5. Gender Budgeting
The 2005-06 Budget introduced a statement highlighting the gender sensitivities of the budgetary allocations.
Gender budgeting is an exercise to translate the stated gender commitments of the government into budgetary commitments, involving special initiatives for empowering women and examination of the utilization of resources allocated for women and the impact of public expenditure and policies of the government on women.
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