Budgeting for Decision Making

1. Presented by
Dr.R.VIJAYALAKSHMI
Assistant Professor
Department of Commerce
SRM Institute of Science of Technology
Chennai.

2.  Budgeting is the process of creating a plan to spend your
money. This spending plan is called a budget. Creating this
spending plan allows you to determine in advance whether
you will have enough money to do the things you need to do
or would like to do.
 If you don't have enough money to do everything you would
like to do, then you can use this planning process to prioritize
your spending and focus your money on the things that are
most important to you.

3.  Since budgeting allows you to create a spending plan for your
money, it ensures that you will always have enough money for
the things you need and the things that are important to you.
Following a budget or spending plan will also keep you out of
debt or help you work your way out of debt if you are
currently in debt.

4.  Develop planning targets.
 Access and analyze historical and current data.
 Connect strategic objectives with daily processes.
 Link top-down targets with bottom-up budgets.
 Integrate and update financial statements as business
conditions change.
 Conduct continuous forecasting.

5.  In countries with deep cultural, religious and economic
diversity such as India, it is extremely important for the
government to allocate resources wisely. Various factors such
as uplifting underprivileged sections of the society, facilitating
financial inclusion, mitigating regional disparity, upgrading
defence capabilities, providing proper educational facilities,
and much more need to be focused on. Therefore, a well-
planned budget is of utmost importance for any government to
ensure economic stability and growth.

6.  Proper resource pool allocation
 Ensuring economic growth
 Growth of business and trading
 Mitigating economic divide
 Administering Operation of PSUs

7.  Reallocation of Resources
 Reducing inequalities in income and wealth
 Economic Stability
 Management of Public Enterprises
 Economic Growth
 Reducing regional disparities

8.  The budget is classified into two segments:
(i) Revenue Budget – The revenue budget contains revenue
expenditure and receipts. In this receipt, both tax revenue (such as
excise duty, income tax) and non-tax revenue (like profits, interest
receipts) are recorded.
(ii) Capital Budget – The capital budget includes the capital receipts
(such as disinvestment, borrowing) and lengthy capital expenditure (for
instance, long-term investments, creation of assets). Capital receipts are
government liabilities or decrease financial assets, such as the recovery
of loans, market borrowing, etc.

9.  A budget influences society in three steps.
 It improves the aggregate financial policy by controlling
expenditure, given the number of revenues.
 It allocates resources of a nation on a foundation of social
priorities.
 It comprises efficient and productive programmes to deliver
goods and services goods and services and achieve targeted
goals.

10.  The main elements of a budget are.
 It determines government expenditure and receipts.
 Budget is estimated for a fixed period, typically for a year.
 Investment and sources of finance are prepared with the
objectives of the government.
 All the budget needs to be passed by assembly or parliament
before implementing it.