ZERO BASED BUDGETING

Under

Public sector undertakings

Lets see ….what is meant by “PUBLIC SECTOR”

The government-owned corporations are

termed as Public Sector Undertakings (PSUs)

in India. In a PSU majority (51% or more) of

the paid up share capital is held by central

government or by any state government or

partly by the central governments and partly by

one or more state governments.

The objective of zero based budgeting is to reset the clock each yearPeter pyhrr was the father was zbb

Peter Pyhrr was the father was

ZBB

The objective of zero based

budgeting is to reset the clock each

year

MORE ABOUT ZBB

Now its time for

A method of budgeting in which all expenses

must be justified for each new period. Zero-

based budgeting starts from a "zero base" and

every function within an organization is

analyzed for its needs and costs.

When V.P Singh was finance minister of

India, zero based budgeting was

introduced in the central govt dept in

1986-87. The problems faced by the

central govt at that time was mounting

non- plan expenditure and decline in

public savings . Defence expenditure,

interest payments and subsidies formed a

major portion of non-plan expenditure.

history

ADVANTAGES

Out of date inefficient operations are identified

Allow manager to quickly respond to changes in

external environment

It promotes questioning and challenging attitudes

It helps the management to design and develop

cost -effective techniques for improving.

DISADVANTAGES

Increased paper work

Cost of preparing many packages.

Small organizations cannot afford it

The process of ZBB requires experience , intelligence,

expertise, and continues training on the part of

executives. Thus ,it is not suitable for

an ordinary organization.