TYPES OF BUDGETS
ON THE BASIS OF DURATION
- LONG TERM BUDGET
- More than 2 years duration
- Eg Rand D expenditure
- SHORT TERM BUDGET
- 1 to 2 years duration
- Production/ Purchase expenditure
- CURRENT BUDGET/ FINANCE BUDGET
- Few weeks or months
- Prevailing expenditure conditions
BASED ON RECEIPT-EXPENDITURE BALANCE
- BALANCED BUDGET
- Expected expenditure is equal to anticipated receipts for the fiscal year
- SURPLUS BUDGET
- Expected revenues surpass the estimated expenditure
- DEFECIT BUDGET
- Expenditure for the fiscal surpasses the receipts
- MERITS OF A BALANCED BUDGET
- Ensures economic stability, if implemented successfully.
- Ensures that the government refrains from imprudent expenditures.
- DEMERITS OF A BALANCED BUDGET
- Unviable at times of recession and does not offer any solution to problems such as unemployment
- Inapplicable in less developed countries as it limits the scope of economic growth
- Restricts the government from spending on public welfare.
- government’s earnings from taxes levied are greater than the amount the government spends on public welfare.
- A surplus budget denotes the financial affluence of a country.
- Such a budget can be implemented at times of inflation to reduce aggregate demand.
- MERITS OF A DEFICIT BUDGET
- Helps in addressing public concerns such as unemployment at times of economic recession.
- Enables the government to spend on public welfare.
- DEMERITS OF A DEFICIT BUDGET
- Can encourage imprudent expenditures by the government.
- Increases burden on the government by accumulating debts.
BASED ON UNDERLYING POLICY
- CORPORATE BUDGET
- WELFARE BUDGET
BASED ON BASIS OF PLANNING
- PERFORMANCE AND PROGRAMME BUDGET
- OUTCOME BUDGET
- ZERO BASED BUDGET
PERFORMANCE AND PROGRAMME BUDGET
- Programs are subjected to test of actual performance
- Involve stage wise planning and standard fixation
- There is relation between input and physical output
- not only measures quantitative outcome of the budget but also in terms of quality of outcomes
- OBB enhances transparency and accountability with schemes being defined for positive interventions rather than mere numeric improvement.
ZERO BASED BUDGET
- Concept given by Peter Phyrr
- Zero based concept where funds are allocated without any reference to previous allocations (Base is zero)
- For new allocation, the funds are provided on utilization basis
GENDER BASED BUDGET
- Budget that includes gender sensitivity of a particular policy
- First introduced in 1984 by Australia
- India adopted it in 2004