Municipal budgeting in India has historically followed a centralized system introduced by the British in 1860. Over time, reforms have introduced line-item, performance, and zero-base budgeting approaches. The municipal budget process involves preparation by executive departments from October to December, approval by the elected council by March. However, municipal budgeting faces drawbacks like improper classification, excessive reliance on past expenditures, lack of targets or resource allocation, and not linking financial and physical plans. Budgetary controls are also weak with no expenditure tracking or bill approval processes.

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
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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
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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.

9. Municipal Budgeting In India
Thank You