ZERO BASE BUDGET

ZERO BASE BUDGET



Zero base budgeting can be defined as –

1) An operating planning and budgeting process which requires each manager to justify his entire budget request in detail and shifts the burden of proof to each manager to justify why he should spend any amount. The procedure requires that all activities and operations be identified in decision packages, which will be evaluated and ranked in order of importance by systematic analysis.

CONTROL OVER EXPENDITURE

CONTROL OVER EXPENDITURE


The expenditure on railways may be either revenue or capital, chargeable to works demand. The control over expenditure exercised against these heads involves two aspects.

 a) Control with reference to sanctions.
       i) Delegation of powers i.e. Railway board to General Managers and to lower sanctioning authorities. 
      ii) In exercise of their financial powers, the sanctioning authority must pay due regard to the “Cannons/Standards of Financial Propriety”.

RAILWAY BUDGET (Short Note)

RAILWAY BUDGET (Short Note)

Budget is a statement of the estimated annual receipts and expenditure both on capital as well as revenue transactions of an organization. It is a process of planning and reviewing the activities of an organization. Railways being a Govt. of India department, receipts and payments of the system were use to be merged in the General Budget of the Govt. of India. As a result of the recommendations of the “ACWORTH COMMITTEE” during 1920-21, it was decided to separate the finances of Railways from General Finances with the objects of securing stability for General revenues and to strengthen the Railways finances. This is generally known as “Separation Convention of 1924”. Since then the Railway Budget is submitted in advance of the General budget.

FINAL MODIFICATION

FINAL MODIFICATION.

This term is use in Rail budget.

 The third review is conducted in the month of February year and is known as Final Modification. Actual expenditure during first nine months and approximate expenditure for the tenth month is reviewed and compared with –

1) Budget grant / Revised grant (if received).

2) Budget proportion.

3) Actual expenditure during the last financial year.

4) Actual expenditure during corresponding period of the last financial year.

APPROPRIATION ACCOUNT

APPROPRIATION ACCOUNT


This term is use in Rail budget. 

After the closure of accounts for the financial year, report is submitted to the Parliament as to how far the budget estimates have been realized i.e. as to how the funds voted by the Parliament and Appropriations sanctioned by the President have been utilized. Three sets of figures are reported namely, Original Grant, Final Grant and Actual Expenditure. Comparison between latter two is made and Variations are worked out duly explaining the same. 

The Appropriation Accounts along-with Railway’s Audit report thereon are presented to the Parliament through Public Account Committee, which is a committee nominated by the Parliament. On passing / acceptance of the Accounts by the parliament, the excess over sanctioned appropriations is regularized and thus cycle of Parliamentary control over Railway’s Finance is ensured.

AUGUST REVIEW

AUGUST REVIEW

This term is use in Rail budget.

The first review is conducted in the month of August, hence is known as August review. In this review, the actual expenditure of the first three months and approximate expenditures for four months is compared with the budget grant for the current year and actual expenditures for the previous financial year. The expenditure is also compared with the budget proportion and the actual expenditures of the corresponding period of the previous financial year.

 The variation in above figures are analyzed and net additional requirements(if any) are asked for during this review.

RULES OF RE-APPROPRIATION

RULES OF RE-APPROPRIATION

This term is use in Rail budget. 

The following are the rules of Re-appropriation: - 

1) Re-appropriation is not permitted from one demand to another demand. 

2) Re-appropriation is not permitted from capital to revenue demands and vice versa. 

3) Re-appropriation is not permitted from voted expenditure to charged expenditure and vice versa.

 4) Any surplus amount that remains unutilized by the end of the financial year lapses with that year and is not available for spending during the next financial year.

 5) Railway Board is empowered to make re-appropriations within the same demand. 

6) GM is empowered to make re-appropriations from one subhead of demand to another subhead of demand but within the same demand.


CONTINGENCY FUND OF INDIA.

CONTINGENCY FUND OF INDIA. 

Normally all expenses incurred by the Government should be met out of consolidated fund of India with the vote of the parliament or Appropriations sanctioned by the President. However, to meet unforeseen contingencies when the expenditures cannot be met out of available grants and the vote of the parliament cannot be obtained due to the same not being in session or dissolved the expenditure is met out of fund created for the purpose under article 267(II) which is known as “Contingency Fund Of India”. The fund is under the control of President of India. As far as Railways are concerned,

CONTINGENCY FUND OF INDIA

CONTINGENCY FUND OF INDIA. 


Normally all expenses incurred by the Government should be met out of consolidated fund of India with the vote of the parliament or Appropriations sanctioned by the President. However, to meet unforeseen contingencies when the expenditures cannot be met out of available grants and the vote of the parliament cannot be obtained due to the same not being in session or dissolved the expenditure is met out of fund created for the purpose under article 267(II) which is known as “Contingency Fund Of India”. 

The fund is under the control of President of India. As far as Railways are concerned, Financial Commissioner (Railways) controls the fund. This fund is used as and when the contingency arises. Money can be withdrawn from this fund on an application addressed to the President and is given as an advance which needs recoupment. The amount from this fund can be withdrawn when the parliament is not in session and to meet the unforeseen expenditure, which cannot be met from out of the amount of grant available. As soon as parliament comes to session an “Accommodation bill” is passed and amount is recouped from Consolidated Fund of India.

FINANCIAL RULES SYLLABUS

  1. Parliamentary Control over Railway Finance
  2.  Public accountability
  3.  Cannons of Financial Property.
  4.  Railway Budget
  5.  Budgetary terms,
  6.  type of Budgets, 
  7. Budget Cycle, 
  8. Demand for grants, 
  9. Expenditure Classification. 
  10. Works Programmer 
  11. Financial Justification of Works
  12. Preparation of Estimates, 
  13. Capital Budget, 
  14. Control over Capital Expenditure. 
  15. Financial Cost Control in Railway Workshops, 
  16. Sheds and Depot. 
  17. Delegation of Powers 
  18. M and P Program, 
  19. RSP.