#### Class-notes prepared and uploaded by-Dr Adidur Rahman Dept. of Pol. Science, HAAC h For 4th sem. (Honours), paper-4026, Public Policy &Administration in India

## TOPIC: Meaning, definitions &Principles of budgeting

The term budget owes its origin from the old French Word 'Bougette', means a 'small leather bag or wallet', which is used to carry financial papers. But t he term 'budget' was used for the first time in 1773. The Chancellor of Exchequer of England used to carry a leather bag containing papers on financial plans to be presented to the British House of Commons. So, he used to open his bougette i.e., the bag containing financial papers before the House and those financial plans came to be known as budget. But in modern times, budget signifies documents containing estimates of revenue and expenditure detailing the programs and planes of action of government for a specified period of a country.

## Definitions:

There is no unanimity among the writers regarding the definition of the term budget. It has been defined from different angles by writers of Public Administration. Following are some of the widely used definitions:

- i. is a financial plan of government for a definite period According to ' '. i. is a financial plan of government for a definite period According to ' '. Taylor,
- ii. budget is a financial plan summarizing the financial experience of the According to , ' ii. budget is a financial plan summarizing the financial experience of the According to , ' Dimock past stating a current plan and projecting it over a specified period of time in future '.
- iii. is a plan of financing the incoming fiscal year. This In the words of , ' iii. is a plan of financing the incoming fiscal year. This In the words of , ' Prof. Munro involves an itemized estimate of all revenues on the one hand and all expenditure on the other' .
- iv. is a document containing a preliminary approved plan of defines budget as, ' iv. is a document containing a preliminary approved plan of defines budget as, ' Rene Stourn public revenue and expenditure'.
- v. annual financial statement The under Art. 112 defines budget as, ' v. annual financial statement The under Art. 112 defines budget as, ' Constitution of India containing an estimate of all anticipated revenue and expenditure of the government for coming financial year'.

Thus, the budget is the master financial plan of the Government. It brings together estimates of anticipated revenues and proposed expenditures for budget period and from these estimates the activities to be undertaken and the means of their financing can be inferred. In the modern world economies, budget is much more than a statement of income and expenditure of public authorities. It reflects the real functioning of the financial system. As Prof. remarks 'budgets are not merely a matters of arithmetic, but in thousand ways go to the root Gladstone of prosperity of individuals and relation of classes and the strength of kingdom'. From the above mentioned definitions, we can assume the following main elements of a budget:

- i.
- i. is a statement of estimates of government receipts and expenditure; i. is a statement of estimates of government receipts and expenditure;
- ii. estimates pertain to a fixed period, generally a year; ii. estimates pertain to a fixed period, generally a year;
- iii.
- iii. and sources of finance are planned in accordance with the objectives of the iii. and sources of finance are planned in accordance with the objectives of the government;
- iv. requires to be approved by Parliament or Assembly or some other authority before its iv. requires to be approved by Parliament or Assembly or some other authority before its implementation.

## Principles or Elements of Sound Budget Making:

Budget is a technique to achieve administrative efficiency in financial resource management. It is an instrument to execute the varied financial and economic programmes of the Government in a phased manner. The preparation and execution of the budget requires the adoption of certain principles. Prof. H.D. Smith set out certain rules which may be called as the basic principles of budgeting. They are as follows: