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Municipal Budgeting in India - Drawbacks
1. Municipal Budgeting In India
Historical Background
Budget Process in Municipal Bodies
Municipal Budgeting – Drawbacks
Budgetary Control System –Drawbacks
Dr. Ravikant Joshi
For SSE Students of Symbiosis University
2. Municipal Budgeting in India
Historical Background
◼ 1860-Sir James Wilson - First finance member
introduced the first budget in Government of
India.
◼ Highly centralized system of financial control.
◼ Introduced line-item budgeting technique.
◼ 1968-introduction of performance budgeting
system by G.O.I
◼ Attempts to introduce zero-base budgeting
system.
◼ Recent attempts to introduce outcome
budgeting / gender budgeting / participatory
budgeting
3. Municipal Budgect Process
◼ Municipal legislations provide for budget
process / calendar / administration
◼ Municipal account codes provide for
budget structure
◼ Budget to be prepared by the executive
wing, approved by elected council of ULB
◼ Acts provide that budget should have
surplus / deficit budgeting is not allowed
7/9/2021 Workshop on Municipal Budgeting
3
4. Municipal Budgeting Process
◼ Budget Calendar
◼ October – November – accounts collects revised and
next year expenditure demands / receipts estimates
from the departments
◼ December – putting together receipts & expenditure
figures / discussion with departments
◼ January – executive head finalises estimates and
place them to standing committee or council
◼ By March end council approves revised and next year
budget estimates
◼ From 1st April budget comes in to force
7/9/2021 Workshop on Municipal Budgeting
4
5. Municipal Budgeting In India
Drawbacks
◼ Defective structure, improper classification
◼ Improper distinction between various natures of
expenditure
◼ Excessive reliance of incremental approach
◼ Absence of overall targets / ceilings
◼ Unrealistic past figures
◼ Absence of proper resource allocation
mechanism
6. Municipal Budgeting In India
Drawbacks
◼ Excessive reliance on deficit financing
◼ Expenditure not contingent on resource
realization
◼ Spending psychology
◼ Budgeting of ‘how much’ rather than ‘how
best’
◼ No scope for cost-analysis/cost-reduction
7. Municipal Budgeting In India
Drawbacks
◼ Non-charging of in-house services provided
◼ Non-allocation of loan charges to respective
services
◼ Non-importance to revised budget formulation
◼ Lacking of long term perspective
◼ Non-linking of financial & physical outlays
◼ Highly rigid, fixed (absence of concept of
contingency budgeting)
8. Municipal Budgeting In India
Budgetary Control System - Drawbacks
◼ Absence of centralized financial control
◼ Non-classification and analysis of expenditure
◼ No advance intimation of expenditure
◼ Defective bill movements system
◼ Defective tendering procedure
◼ Lack of short term funds requirements
◼ Excessive operation through suspense a/c.