BUDGET:
MEANING
AND
PRINCIPLES
Budget
- Derived from French ‘bougette’
- Literally means leather bag/wallet to
carry official papers
-Plan of expenditure and of revenue
to balance the expenditure
-India- Annual Financial Statement
-Financial year in India
PRINCIPLES
The observance of these
principles is considered
essential for sound budgetary
practice
* SINGLE BUDGET
Overall financial position of the
Government as a whole is revealed
INDIA
-General Budget
-Railway Budget- Separate Railway
Budget was recommended by Acworth
Committee in 1921
* BALANCED BUDGET
Estimated expenditure should not exceed
estimated revenue
If Expenditure > Revenue-DEFICIT BUDGET
If Revenue > Expenditure-SURPLUS BUDGET
*ESTIMATES SHOULD BE
ON CASH BASIS
Estimates of expenditure & revenue should
relate to what is expected to be actually spent
or received during the year, & not to liabilities
or demands which incurred or which accrue
within the year under reference, but are to be
realized in some other year
*REVENUE & CAPITAL PORTIONS
SHOULD BE KEPT DISTINCT
Distinction b/w recurring expenditure & revenue
on the one hand, & capital payments &
receipts on the other should be maintained, &
the two should be shown in two separate
parts of the budget known as the current or
revenue budget & capital budget
*BUDGETING SHOULD BE GROSS &
NOT NET
All transactions both of receipts & expenditure
should be fully shown, & not merely the
resultant net position
*ESTIMATING SHOULD BE A CLOSE
AS POSSIBLE
There should be exactness,
neither gross over-estimating or gross underestimating
*THE FORM OF ESTIMATES SHOULD
CORRESPOND TO THE FORM OF
ACCOUNTS
The budgetary heads should be the same as
those of accounts. This facilitates budget
preparation, budgetary control and
accounts-keeping
*RULE OF LAPSE
Any part of the grant not spent within the
financial year expires at the close and can not
be used in the next financial year. No money
can be used without statutory authorization
(Resultantly irrelevant/heavy spending at the
end of financial year-March Rush)