Budget

Meaning
The term budget is derived from a French
word ‘ Bougette’ which means a leather bag.
Budget is one of the principal tools of
financial administration in addition to being
the most powerful instrument of legislative
control and executive management. It means
a statement of income and expenditure. It
 can be long term as well as short term. It can
be that of a family, department, organization,
state or nation. It can also be monthly,
quarterly, half- yearly and yearly. A
comprehensive budget reflects the national
sources of income and expenditure and also
surplus and deficit during the period under
review. It has come to stay as an effective tool
of administration.
Definitions:
For Taylor- “ Budget is a financial plan of the
government for a definite period.”
For Wilne- “ Budget is a comparative chart of
revenue and expenditure.”
Dimock says- “ A budget is a financial plan
summarising the financial experience of the
past , stating a current plan and projecting
it over a specified period of time in future.”
 Principles of Budget
In order to be an effective instrument of
financial and work management , a budget
must conform to certain budgetary principles.
The following are the principles of
budget.
1. Clarity- The budget should be clear so that
it is understandable to the people.
2. Accuracy- Budget estimates should be
accurate as possible.
3. One budget- There should be only one
budget for all financial transactions of the
government.
4. Complete Picture- Budget should present
a complete picture of all heads of income
 and expenditure.
5.Definite period- The budget should be
prepared for only one year.
6. Planning- A budget after enactment
becomes the work programme of the
government. It must therefore be based
upon proper planning of the resources and
 activities of the government.
7.A well- estabished principle of budget is
that no demand for grant is made except on
the recommendation of the executive. It
means that it is the function of the
the Executive alone to prepare the budget
and place it before the Parliament. The
Parliament can decrease or refuse the
demands presented to it by the Executive but
cannot increase them.
8. In good budget principle of unity must be
observed which means that all receipts and
expenditures should be shown separately
under separate heads. Receipts and
 approriations should be specific.
9.A budget should not be gross but net.
( Gross budget- total cost to deliver our
programmes and services.)
(Net budget- budget in which all transaction
is shown.)
10. The budget should be a balanced one. It
should not be deficit budget ( spending more
than the revenue.)