TYPES OF BUDGETING SYSTEM:INCREMENTAL BUDGETING,Zero-based budgeting (ZBB),Gender budgeting (GB),

 

TYPES OF BUDGETING SYSTEM

Prominently Budgeting is done with the following methods:

INCREMENTAL BUDGETING :

• The most conventional budgeting system, widely adopted across many countries, is a method where a new budget is developed by implementing only minor adjustments to the existing year's budget. 
• This approach utilizes either the previous year's budget or actual performance as basis of the budget, with additional incremental amounts included for the upcoming budget period. 
• Since it is based on last year's budget, consistency and stability over time are maintained. 
• Resource allocation for the current year depends upon allocations from the prior period. This method of budgeting does not require any extensive analysis or calculations.
• This budget is very simple in its implementation, which aids management in saving time and simplifying calculations.
• With this budgeting method, the effects of any adjustments in the current year’s budget can be readily observed and recognized. This is due to the fact that the budget remains consistent and almost remains unchanged from year to year.
•  Significant variations in the subsequent year's budget are rare; thus, if management enacts any major modifications, they can be easily detected, and the repercussions can be clearly seen.

On negative side :

• It does not encourage innovation, as it simply follows last year's budget line items with incremental adjustments. 
• This method is not advisable, as it overlooks evolving conditions and the changing environment.  
• Additionally, it fosters a mindset of "spend up to the budget" to secure a suitable allocation for the following period, leading to a "spend it or lose it" attitude.

 

Zero-based budgeting (ZBB) :

• It is a budgeting approach where every expense must be justified for the upcoming new period.

• The zero-based budgeting process begins from a "zero base," evaluating the needs and costs of every function within an organization.

• ZBB offers benefits such as improved Efficiency, Accuracy, prevention of Budget inflation, enhanced Coordination and Communication, and a reduction in redundant activities.

• However, Zero-Based Budgeting also has some drawbacks, including High Manpower Turnover, being Time-Consuming, and a Lack of Expertise needed to implement this kind of budgeting.

Gender budgeting (GB) :

Background :

The concept of gender budgeting emerged in response to the global context of economic globalization. Initially, countries within the Commonwealth took the lead in implementing gender budgeting initiatives. During the Seventh Plan (1987-1992), 27 significant schemes aimed at women were identified for monitoring to evaluate the amount of funds and benefits received by women. The Eighth Plan emphasized the importance of ensuring a specific allocation of funds from general developmental sectors to women. The Ninth Plan introduced the Women's Component Plan (WCP), which sought to allocate 30% of funds specifically for women-related sectors. The Tenth Plan aims to connect the concepts of the WCP and gender budgeting.

Budget 2016-17 mentions that:

“Gender Budgeting in its simplest connotation is 'Gender Analysis' of the budget aimed at examining the budgetary allocation through a gender lens.” 

• Gender budgeting represents the integration of a gender perspective into the budgetary process,policy development, implementation, and assessment.

• Gender budgeting in India have  gender specific programmes in the budget under various ministry budgets  and it has  separate gender budget statement  attached as part of the general budget. 

• In India, gender budgeting is a developing field and goes beyond merely accounting.

• Gender budgeting enhances transparency concerning the factors that underlie political decisions related to the budget.

• It promotes increased accuracy and sustainability since available funds are better aligned with the actual needs of various social groups.

• Gender budgeting is a process that exposes the discriminatory effects of financially impactful decisions and facilitates a gender-equitable reshaping of resource allocation choices.

• It serves as a means to implement gender equality goals, even during periods of larger budgetary allowances.