Zero Based
Budgeting - An Introduction:
ZBB originated and developed in the USA. It was created by Peter A.Phyrr, a management private industry. The then President Jimmy Carter introduced this Budgeting system in USA.
ZBB is a rational system of Budgeting. Under this system, every schemes should be reviewed critically and readjusted totally from Zero)or scratch) before being included in budget. Thus the ZBB involves a total reexamination of all schemes afresh (from base Zero) instead of following the incremental approach to budgeting which begins with the estimation of current expenditure.
Advantages of ZBB:
1. It eliminates the low or lesser prioritized programs.
2. Improves the program effectiveness dramatically.
3. Makes the high impact programs to obtain more finances.
4. reduces the Tax increase.
5. It facilitates critical review of schemes in terms of their cost-effectiveness and cost benefits.
6. It provides for quick budget adjustments during the year.
7. Allocates the scarce resources rationally
8. It increases the participation of line hierarchy bureaucrats in the preparation of budget.
9. It detects Inflated Budget
10. It increases the responsibility in financial decision making in a greater extent.
11. Identifies the absolute source for outsourcing.
12. In India it was introduced in the Department of Science and Technology in 1983 and in all other departments in 1986-87.
13. It is also regarded as a greater legislative control over the executives.
14. Maharashtra government renamed and used it as Development based budget.
ZBB originated and developed in the USA. It was created by Peter A.Phyrr, a management private industry. The then President Jimmy Carter introduced this Budgeting system in USA.
ZBB is a rational system of Budgeting. Under this system, every schemes should be reviewed critically and readjusted totally from Zero)or scratch) before being included in budget. Thus the ZBB involves a total reexamination of all schemes afresh (from base Zero) instead of following the incremental approach to budgeting which begins with the estimation of current expenditure.
Advantages of ZBB:
1. It eliminates the low or lesser prioritized programs.
2. Improves the program effectiveness dramatically.
3. Makes the high impact programs to obtain more finances.
4. reduces the Tax increase.
5. It facilitates critical review of schemes in terms of their cost-effectiveness and cost benefits.
6. It provides for quick budget adjustments during the year.
7. Allocates the scarce resources rationally
8. It increases the participation of line hierarchy bureaucrats in the preparation of budget.
9. It detects Inflated Budget
10. It increases the responsibility in financial decision making in a greater extent.
11. Identifies the absolute source for outsourcing.
12. In India it was introduced in the Department of Science and Technology in 1983 and in all other departments in 1986-87.
13. It is also regarded as a greater legislative control over the executives.
14. Maharashtra government renamed and used it as Development based budget.
U.S. President Jimmy Carter first used Zero-based budgeting. He used ZBB when he was governor of Georgia. After being elected as president, Zero-based budgeting used to balance the federal budget and reform the federal budgeting system.
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