Planning Programming Budgeting System: Background
- emphasize on the objectives of control and accountability rather than allocation of limited resources on programmes and projects;
- provides information on the objects of expenditures, not the objectives of expenditure;
- does not help in analyzing and assessment of the impact of budget on the economy;
- emphasize on the incremental approach without due consideration of the necessity;
- emphasize on the financial performance rather than the physical;
- does not relate the current expenditure with the future budgetary repercussions
History and Concept of Planning Programming Budgeting System (PPBS)
Stages of Planning Programming Budgeting System (PPBS)
- Specification of Objectives - The objectives of the programmes are to be specified in consistence with the long term goals in quantitative terms as far as possible.
- Systemic Analysis - The possible alternative projects to achieve the programme objectives are analyzed in a systematic way with the use of cost-benefit and cost-effectiveness analysis.
- Functional Classification - The budget is classified on a functional basis like functions, programmes, projects and activities.
- Organization - Budget formulation addresses the organizational structure, managerial and administrative procedures of the programs/ projects/ activities.
- Evaluation - The mechanism for evaluation of performance on the basis of financial and physical performances to monitor, and take corrective actions, if necessary.
Advantages of Planning Programming Budgeting System (PPBS)
- It integrates the process of program/ project formulation, budget allocation and evaluation in a systematic way.
- It helps in the choice of programs/ projects, allocation of resources on them and performance evaluation for the executive and legislature.
- It integrates the decision makings regarding the choice of program/ projects to achieve the intended objectives.
- It attempts to promote maximum social advantage with the prudent (wise-full) use of scarce resources.
- It incorporates the future budgetary repercussion (may be 3,5,10 years) as per the nature and size of the projects.
Limitations of Planning Programming Budgeting System (PPBS)
- For appropriation and control purposes, expenditures are continued to be classified in the traditional line-item approach. Various objectives budgetary policy makes budgeting complex and confusing.
- The problem arises in its application in case of multiple objectives of a program/ project that involves different agencies.
- It is difficult to acquire necessary information regarding performance evaluation and cost estimation in an uniform way in all governmental activities.
- It emphasizes on physical and financial performance, not on qualitative performance.
- It intends to centralize the budgetary decision makings.