WHAT IS PERFORMANCE BUDGETING?
Budgeting is nothing but the technique of expressing, largely infinancial terms of management’s plans for operating and financingthe enterprise during specific periods of time. Any system of budgeting, in order to be successful, must provide for performance appraisal as well as follow-up measures. It shouldbe capable of predicting statistically the performance for thebudget period in terms of probabilities and levels of confidence.For example, if a bank stipulates that the result of its businessbudget would be correct up to a level of 5% from the budgetedbusiness.Performance budgeting involves evaluation of the performance of the organization in the context of both specific as well as overallobjectives of the organization. It presupposes the crystal clarity of organizational objectives in general and short-term businessobjectives as stipulated in the budget, in particular, by eachemployee of the organization, irrespective of his level. It, thus,provides a definite direction to each employee and also a controlmechanism to higher management.According to the National Institute of Bank Management,performance budgeting technique is, “the process of analyzing,identifying, simplifying and crystallizing specific performanceobjectives of a job to be achieved over a period in the frameworkof the organizational objectives, the purpose and objectives of the job. The technique is characterized by its specific directiontowards the business objectives of the organization”. Thus,performance budgeting lays immediate stress on the achievementof specific goals over a period of time. However, in the long-run itaims at continuous growth of the organization so that it continues