Zero Base Budgeting

CTNIT 12 ZERO BASE BUDGETING

Structure

12.0 12.1 12.2 12.3 12.4 12.5 ,'12.6 12.7 12.8 12.9 12.10 12.11 Objectives Introduction Concept and Meaning of Zero Base Budgeting Zero Base Budgeting and Traditional Budgeting: A Comparison Genesis of Zero Base Budgeting StepsIElements of Zero Base Budgeting Introduction of Zero Base Budgeting in India Implementation of Zero Base Budgeting -Benefits and Problems Let Us Sum Up Key Words References Answers to Check Your Progress Exercises

After studying this unit, you should be able to: explain the concept and meaning of zero base budgeting distinguish zero base budgeting from traditional budgeting trace the developments which necessitated the introduction of zero base budgeting describe the process involved in implementation of zero base budgeting; and discuss the problems and benefits in implementation of zero base budgeting system.

12.1 INTRODUCTION

India has been passing through a tight financial position. The budgetary deficit over the years has been increasing and as a result strict financial control became an urgency. The Government has taken a number of steps to reduce the budgetary deficit through control of expenditure. However, it is a well-known fact that financial management can be toned up through budgetary reforms on the lines of Zero Base Budgeting. Zero Base Budgeting (ZBB) is a control technique which requires that an organisation while preparing its budget should not take earlier year's expenditure for granted but should start afresh. This concept implies that a complete re-examination of the ongoing programmes and activities should be carried out to assess their continued utility. In this unit an attempt has been made to explain the concept of Zero Base Budgeting, its objectives, historical background and the process followed for its implementation. It also discusses the benefits and problems arising from the implementation of zero base budgeting.

BUDGETING

Zero Base Budgeting is a management...