Bureaucracy: Theoretical Perspective in Public Administration

Bureaucracy: Concept

The term Bureaucracy is derived from the French word Bureau and Cracy. Bureau means desks with drawers and Cracy means the government. Martin Albrow has traced the term “Bureaucracy” back to 1745, when Vincent de Gournay, a French physiocrat, used it to describe the Prussian government. In the eighteenth and early nineteenth centuries, the term was used to describe the type of government in which power resided with officials. The term was used as an additional Aristotle’s typology of governments. Aristotle noted three true forms of government Kingly rule, Aristocracy and constitutional government and three perversions of the true forms – Tyranny, oligarchy and democracy. Bureaucracy was used to represent a forth type of perversion of government.

Max Weber (April 21, 1864 – June 14, 1920) is the leading writer on bureaucracy. After completing his PhD. in 1889, he became the professor of economics at Fidel Berg University. Of course, he qualified in law but basically, he was a sociologist. He was a scholar of interdisciplinary pursuit for the student of the management and organization theory, his essay “The theory of social and economic organization” is most important. To understand his concept of bureaucracy, we must go through his concept of authority. He distinguishes authority from power. Power – the ability to force people to obey regardless their resistance. Whereas authority mean the right to give orders, and that those who receive them will voluntarily obey them. Authority has sanction where power do not have.

Hence, bureaucracy is the system of government in operation by the paid officials and not by the elected one. In other words, authority is legitimate power. Weber classified the authority found in an organization in three categories. They are Charismatic, Traditional and Legal rational. (Bureaucracy)

1. Charismatic Authority


The first mode of exercising authority is based on the personal qualities of the leader. Weber used the Greek term ‘charisma’ – mean any quality of individual’s personality by virtue of which he is set apart from ordinary men and treated as if endowed with super natural, super human or at least exceptional qualities. This is the position of Mahatma Gandhi or other religious leaders. Whose organization consists of himself and set of disciples, the disciples have the job of mediating between the leader and the masses. The persons who receive the command obey the leader because they believe in his extraordinary abilities. The charismatic leader selects his disciples or followers as his officials based on purely on their personal devotion to him rather than on their special qualification or status. Generally, this type of organization has built – in – instability. The questions of succession always arises when leader dies and authority has to be passed on. In that moment, various disciples claiming the ‘true heirs’ to the charismatic leader thus the process is usually one of fission. Even if the leader himself nominates his successor, he will not necessarily be accepted until another charismatic leader present himself, and so the organization must lose its charismatic form, becoming one of the two remaining types. If the succession become hereditary, the organization becomes traditional in form, if succession is determined by rules, regulation and qualification, a bureaucratic organization develops.

2. Traditional Authority


When charisma is traditionalized by making its transmission hereditary, it becomes the part of the role of the leader rather than being part of his personality. Traditional authority derives its legitimacy from the acceptance of it since the time immemorial. The person exercising authority generally are called ‘Masters’ who enjoy personal authority by virtue of their inherited status. Their commands carry legitimacy because of the customs, conventions and precedence but they can also give orders based on their personal decisions. The persons who obey the order are called loyal or followers, they carry out the commands of the masters out of sheer (only) personal loyalty and a pious for his time honored status. In this patrimonial regime, the person who carry out the orders are household officials, relatives and favorites of the masters and their sphere of activity changed according to his whims and fancies. However, all these actions are legitimized in the name of tradition and customs.

The difference between the Charismatic Authority and Traditional Authority are
Charismatic Authority
Traditional Authority
1. Legitimacy based on the acceptance of the masses.
1. Traditional authority’s legitimacy based on the precedent and convention, custom.
2. Disciples are recruited only from their charismatic quality and devotion upon leader.
2. Here staffs are recruited from two sources i.e. patrimonial and personal loyalties.
3. Personality has big role to play.
3. Personality has no role to play.
4. Unlike traditional authority not bound by precedent and convention.
4. In traditional form so many activities are done which is based on the convention and precedence.
5. No other staff recruited or provided benefits.
5. There are various types of staffs recruited and provided benefits.

3. Bureaucray or Rational Legal Authority 


The primary criteria must meet to be consider Bureaucracy or Rational Legal Authority are:

a) Sphere of competence or qualification of office: No activity of public administration can be performed without competent, trained, skilled and merit personnel. Well planned organization based on sound principles have failed due to inefficiency of the personnel who were running these organization. Hence, they should have profound knowledge of office rules and possess special technical learning in their experience to the solution of the problems of the country. Uniformity of performance, coordination of different task, responsibility and role-relationship.

b) Methodical provision or rules and regulation: Operations are governed by a consisted system of abstract rules, which are more or less stable and exhaustive. There is the principle of fixed and official jurisdictional areas, which are generally ordered by rules, that is by laws or by administrative regulation. The officials are subject to strict and systematic discipline and control in the conduct of his office. And where there is no specific rule of the particular matter, it follows earlier precedents. It is essential that there must be clear jurisdictional areas to eliminate disputes, which weaken the form of government.

c) Principle of hierarchy: In hierarchy, there are various levels of authority and responsibility. There is a well ordered system of superior subordinate relationship, in which there is supervision of the lower officials by the higher ones. Every official is responsible to his immediate superior and in his own turn holds one immediate under him and responsible to himself. It is therefore, hierarchy becomes a channel of command and mean of communication among various levels of authority.

d) The impersonal order: (Neutral, Rational, without biased or without inclination). In  weber’s ideal type construct of bureaucracy, the most striking and thought-provoking idea is his belief that impersonal order should orient the action of the bureaucrats both in the issuance of the commands to subordinates and their obedience to them. To put this in the word of Merton, “Authority, the power of control, which derives from an acknowledge status, inheres in the office and not in the particular person who performs the official roles.” In other words, the bureaucracy form has no place for personal whims, fancies or irrational sentiments. Official activity is conducted in a business-like manner with a high degree of impersonality.

e) Career Service: Employment in the bureaucratic organization is based on technical qualification and is protected against arbitrary dismissal. The other criteria for the official are the fixed salaries paid in money. The full time occupation in the office, the prospects for further promotion according to seniority or to achievement or both in the career, and the strict and systematic discipline and control. Weber asserted that the bureaucratic organization form a purely technical point of view, could be capable of attaining the highest degree of efficiency.

f) Personal and public ends: Officials do not own the resources necessary while rendering duties but they are accountable for the use of official resources. Official business and private affairs, official revenue and private income are strictly separated; offices cannot appropriated, misuse or embezzlement by the incumbent (holder) as private property which can be sold or inherited.

g) Written Documents: The last principle of Weberian bureaucracy is that the administrative acts, decision and rules are formulated and recorded in writing even in case where oral discussion is the rule or is even mandatory. Documents make the administration accountable to people and provide a ready reference for future action.

Criticism of Bureaucracy

  1. R. K. Merton has argued that bureaucracy as an organizational form is characterized by rigidity, over emphasis on rules and regulation rather than on goals and objectives and marked by lack of public relations and class consciousness on the part of bureaucrats.
  2. Herbert Simon and Chester Bernard have proved that the administrative efficiency would lessened if we follow Weber’s structural and formal approach. In an organization, efficiency could be increased through informal relations and unofficial practices.
  3. Rudolf complained that Weberian model carries a misconception that administration was a rational machine and officials were technical functions.
  4. Social scientist like Warren Bennis points out that the bureaucracy is likely to become obsolete because the new social system would be better suited to meet the demands of industrialized society, where change is galloping.
  5. Simon and March says that Weber did not pay any attention to the human behavior in an organization. Hence his ideal type would not attain maximum efficiency as it emphasizes more on the structure of the bureaucracy than on the human beings who personify it.
  6. La Palombara believes that developing societies may find Russian or Chinese methods of administration more effective than western bureaucracy.
  7. Martin King Whyte’s “Bureaucracy and modernization in China” says that during the Revolution periods of Maoist history, the Chinese press was full of examples of highly trained specialist who would not solve the simplest work problem and unskilled personnel who is using common sense and political inspiration were able to come up with vital work innovation.
  8. Talcott Parsons draws attention to the fact that Weber expects the administrative staff to be technically superior as well as possess right to give orders. But it gives rise to conflict within bureaucracy, since it is not possible to ensure that high position in the hierarchy in authority will be matched by equivalent professional skill in which case the individual working in an organization will face the problem of whom to obey. The person with the right to command or a man with the greater expertise.

Conclusion of Bureaucracy

The critics of Weber have argued that the Weberian model of bureaucracy lacks empirical validity, particularly when it is related to modern administration but Weber constructed his ideal keeping the condition of Germany of his times. And Weber has said that his (ideal type) or legal-rational model is superior and permanent. It is only because he compared his legal-rational model with the traditional and charismatic type of organization. Can there be any disputes when he says that legal rational model with skilled official would attain maximum efficiency when compared to the unskilled and servantile bureaucracy?

Today, we see in practice in societies of the world, Weber being proved correct when he said that the societies which are governed by the bureaucracy can never get rid of it, the Afro-Asian countries starting from India could get rid of alien rule but not the bureaucracy practices established by the colonial ruler.

Weberian model no doubt includes both, the positive and negative elements. Elements such as selected through merit and technical qualifications, complete absence of appropriation of official position by the incumbents come under positive category. Elements such as impersonal order, stable and exhaustive rules, hierarchy written documents from the negative category. As the negative elements is given greater weight in the model, the positive elements get golfed and enfeebled by the huge stream of negative.

Division of Work
In a bureaucratic organization, the total organizational task is broken down into a number of well-defined specialized functions. These functions are divided between officials positioned at different organizational levels. This implies that each position in the hierarchy has its own clearly specified sphere of duties and authority.

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Scientific Management Theory

Fredric W. Taylor (1856-1915) was a mechanical engineer. He joined the Midvale Steel, works as a laborer and rose rapidly to Foreman and later chief engineer. He was afterward employed at Bethlehem Steel, works as a consultant and devoted to the propagation of his idea.

Theoretical View for Scientific Management

To find out the best way of doing things was the essence of the movement knows as scientific management. The central tenets of their approach is that if material rewards are closely related to work effort, the worker will respond with maximum performance if he is physically capable of Taylor essentially paid attention to the physical character of the human body in routine job in using hammer, pick up loads. Eventually Taylor come to view human and machine resources as complementary to one another. Motivation, division of work, responsibility, good salary, time and motion study are the main contribution of the Taylor.

The following are some typical proposition or statement of scientific management:
  • The two hands should begin and complete their motion simultaneously.
  • Smooth, continuous motion of hands are preferable to zigzags or straight line motion involving sudden and sharp changes in direction.
  • Proper illumination increases productivity.
  • There should be a definite and fixed place for all the tools and materials. (Taylor wanted the worker to be paid weekly if not daily).
Taylor pioneered the scientific method with its emphasis on experimentation, observation, collection of data, classification and analysis and derivation of laws and principles.

Taylor stated the principle object of management is to secure maximum prosperity for the employer as well as to the employee. For the employer maximum prosperity means not just large profits in the short term but the development of all aspects of enterprise to a state of permanent prosperity. Likewise, for the employee, maximum prosperity mean not just immediate higher wages but his development and security for his future so that he may perform efficiently in the higher grade of work for which his natural ability fit him.

What the workmen want from their employer beyond anything else in higher wages and what employers want from their workmen in low labor cost of manufacture. What are the inefficiency or drawback to achieve this common aim of the both? He suggested three causes:

a) The fallacious belief of workers that nay increase in output may cause unemployment to them.
b) The defective system of management, Taylor after serious observation and study of operation of many factories, identified the following defects of management.
  • Management had no clear understanding of worker’s management responsibilities.
  • Lack of effective standard of work.
  • Failure of management to design jobs properly and to offer the proper incentives to worker.
  • Most decisions of the management were unscientific as they were based on hunch (idea not based on evidence), intention and past experience.
  • Placement of worker without consideration of their ability, aptitude (natural ability) and interests.
c) The rule of thumb or effort wasting method to avoid all these weaknesses or drawbacks, Taylor lays down four slogans of management. He says,
  1. Science – Not rule of thumb
  2. Harmony – Not discord (disagreement or quarreling)
  3. Co-operation – Not individualism
  4. Maximum output – In place of restricted output
Besides this, Taylor lays down four principles of management:

1. The development of true science of work

When science is viewed as an ‘organized knowledge’, every act of a work men can be reduced to a size in the interest of the worker and management. It is necessary to know as to what constitutes a fair day’s work. It saves the worker from the unnecessary criticism of the boss, and enables the management to get the maximum work from the worker. This needs a scientific investigation of ‘a large daily task’ to be done by qualified workers under optimum (most favorable) condition. Such development of science of work enables the organization to produce more; enables the worker to receive higher wages and much larger profit to the company.

2. The scientific selection and progressive development of the workmen

To ensure the effective performance of the scientifically developed work, there is also need to select the worker scientifically possessing physical and intellectual qualities. This need a deliberate study of the aptitude, nature and performance of the worker and finding out what possibilities and limitation one has for future development. Taylor believed that every worker has potentialities for development. He insisted that every worker must be systematically and thoroughly trained. He felt that it is the responsibility of the management to develop the worker offering him opportunities for advancement to do the job to the fullest realization of his natural abilities. Employees accept the new methods, tools and conditions willingly and enthusiastically in learning to do a good job for a high rate of pay.

3. The bringing together of the science of work and the scientifically selected and trained men

To enable the workers to do his job and to ensure that he may not slip back to the early methods of doing works, there must be somebody to inspire the workers. Taylor felt it as the exclusive responsibility of the management. He believes that workers are always willing to co-operate with the management, but there is more opposition from the side of management. Taylor maintained that this is process of bringing together causes the mental revolution.

4. The division of work and responsibility between management and workers
In the traditional management theory, the worker bares the entire responsibilities. But Taylor’s scientific management assumes the equal responsibility between management and worker. The manager unlike in the part, is equally busy as the worker. This division of work creates between them as understanding and mutual dependencies. This led to the constant and intimate cooperation between them. All this results in elimination of conflicts and strikes.

After the use of scientific management principles the following result appeared;

30 percent production roses
50 percent labor force decreased, and
60% percent income increases.

Criticism or intellectual exercise (Art of making judgment on literature)

  1. The trade union were against the modern methods of increasing outputs. The labor leader considered Taylorism as not only destroying trade unionism but also destroying the principle of collective bargaining and creating employment.
  2. Taylorism was also often attacked by the mangers. Those who wanted quick promotion to the high managerial position without any merit based on higher education opposed Taylor’s stand, which advocated tanning by highly trained experts. Taylor had to resign from both Midvale Steel works and Bethlehem Steel because of friction with the company managers.
  3. Among others who criticized Taylor include Oliver Sheldon, Miss Marry Parker Follett, Elton Mayo, Peter Drucker and others. They changed that Taylor’s scientific management was mechanical, impersonal and under emphasized the human factor.
  4. Behaviorist charged that Taylor’s method of scientific management sacrifices the initiatives of the worker, his individual freedom and the use of his intelligence and responsibility. 
  5. Herbert A. Simon and March have described the scientific management as the physiological organist theory.

Conclusion

Despite the limitations concerning an adequate understanding of human psychology, sociology and anatomy of work – Taylor’s work remains supremely important. By all accounts Taylor must be regarded as a pioneer in the study of human beings at work. He was the first person to initiate the quest (search or trying to find) for better performance at work.

Scientific management had a tremendous effect on industrial practice in the USA. It even spread to Germany, England, France, USSR and other European countries. Taylor’s principles were included in the curriculum of the education and training of the engineers in Russia.

Taylor, in brief, combined theory and practice, thought and experiment and doing and teaching all in the one person and in one life. This movement had a major influence on the growing reform and economy movements in Public Administration.

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Fiscal Policy: Role and Evolution of Fiscal Policy

Fiscal Policy: Concept

Governmental financial policies and operations, concerning the raising and disbursement of funds, influence the economic behaviors and activities, and so the national income, employment, income distribution, price situation, international trade, etc. This realization has led to make deliberate adjustments in governmental income and expenditure policies and programs to attain the economic objectives. Such an adjustments is called the fiscal policy. So fiscal policy is concerned with the adjustments in the operation of the treasury to solve and attain economic problems and objectives.

Arthur Smithies defines fiscal policy as, "a policy under which the government uses its expenditure and revenue programs to produce desirable effects and avoid undesirable effects on the national income, production and employment."
According to Due and Friedlander, “By fiscal policy we refer to the governmental determination of the level and structure of taxes and expenditures, and the manner of financing a budgetary surplus or deficit to achieve the various macro-economic goals of full employment, price stability, growth, balance of payments equilibrium, and so forth.”
Ursula Hicks defines, “Fiscal policy is concerned with the manner in which all the different elements of public finance may collectively geared up to forward the aims of the economic policy.”
J. M. Keynes defines, “Fiscal policy is a policy that uses public finance as a balancing factor in the development of the economy.”

Evolution of Fiscal Policy


Since late 18th. Century until 1930’s, the ‘Laissez-faire’ policy guided public finance to make least possible interference on the functioning of free market mechanism. Then the ideals of sound public financial policy were:
  1. reduction of public expenditure to the minimum possible limit;
  2. tax structure be designed in such a way so that the market or price mechanism be disturbed to a little extent as far as possible; and
  3. budget to be annually balanced.
The traditional belief did not recognize the possible effects of taxes and expenditure upon the level of national income and employment. Taxes were considered only a means to finance government expenditure, and not a means to regulate the economy. Similarly, borrowings to finance government expenditures in maintaining economic stability were not realized.

The Great Depression of 1930’s was a milestone in the evolution of fiscal policy with the operation public financial operation in influencing the economic activities. At that time, governments were to provide relief to the unemployed people and to revive the economy from depression by increasing the effective demand. J.M. Keynes advocated the use of public financial operation in this regard.

In 1940’s. the followers of Keynes like Lerner, Hansen, Dalton, and Beveridge added new dimension to fiscal policy to control inflation as well. Then the flexible or managed budgetary policy was realized and practiced as needed by the economic situation.

After the Second World War the importance of fiscal policy was further recognized in the developing countries. The urge for fast economic growth led to adopt planning in most of the developing countries. This led to the need for increasing governmental investments and regulate the private sectors’ investment activities in consistent with the plan objectives. In the late 1960’s, the significance of fiscal policy to promote distributive justice was realized. And in the 1970’s, the need for maintaining ecological balance (environmental protection) also became the part of fiscal policy.

Role of Fiscal Policy


1. Fiscal Policy and Economic Growth

In a simple way economic growth can be understood as the increase in the level of national production, and thus the national income. It is measured as the increase in Real GDP/GNP or Real Per Capita Income. Economic growth has a process. For growth the productive capacity of the economy should be increased, which is possible with the increase in capital formation. Capital formation needs increase in national investments. To increase national investments there is necessity to mobilize domestic savings by both the private and government sectors. Besides, attraction of foreign capital also helps in this concern.

Growth (G) = Investment Ratio (I) / Incremental Capital Output Ratio (ICOR)

So, economic growth depends on the size of the national investments and the size of the incremental capital output ratio. In the underdeveloped countries the necessary amount of savings and investments can not be generated only by the market system. And the government is to play the leading role with functioning as an investor, facilitator and regulator of the economy by using necessary fiscal policy.

Increase in national savings includes both the private savings and government savings (in the form of revenue surplus). Private savings can be increased and mobilized with establishment and expansion of the financial institutions of different nature supporting through expenditure (including subsidies), and tax incentives as tax-holidays, concessions, depreciation allowances, carry-over losses, expansion of business activities, etc. for the private sector.

National savings can also be increased with the imposition of taxes generating maximum potential revenue and minimizing the recurrent expenditure of government with substantial amount of revenue-surplus, borrowings and creation of extra money. Resource gap in development finance can be supplemented by receiving foreign aids as well as attracting private foreign investments. 

The public income from different sources may be used as expenditures on production activities by government itself, creation of physical infrastructures, research activities, promotional activities to increase the productive capacity of the economy. These investments also attract private investments.

2. Fiscal policy and Distributive Justice

In the underdeveloped countries there is wide inequality in the distribution of national income. One of the basic objectives of a welfare state is to minimize the inequality in national income distribution. For this, people in the lower income strata and underprivileged should be enabled to earn more. Fiscal policy can help in this concern.

Higher income in the UDCs largely goes on luxurious consumption and unproductive investments. Progressive taxes on higher income and wealth, luxurious consumption and unproductive investments generate substantial revenue for the government. At the same time, low rate of taxes or exemptions on production and consumption of mass consumption goods, if necessary even on imports and subsidy increases income of the low income people in an indirect way with reduction or control of prices.

Public expenditure on socio-economic upliftment of the poor people with the provision of free or subsidized education and training, health, safe drinking water and sanitation, housing, subsidy on financial support and special development programs help in enabling their earning capacity.

Similarly, priority for labor intensive technology helps to increase employment opportunities. Public expenditure on different developmental activities using labor intensive technology is desirable. Along with this, tax incentives for private sector absorbing more labor also help in this regard.

Public expenditure on social welfare activities like old-age pension and other allowances, operation of charitable institutions also promotes distributive justice. 

Minimization of regional disparities and rural-urban disparities through the creation of socio-economic infrastructures, fiscal incentives, subsidy and special development programs help in attracting economic ventures, creation of employment opportunities and utilization of local resources, and promote economic status of the relatively less developed regions.

3. Fiscal policy and Balanced Development

Development in totality refers to simultaneously development of all sectors (at least the major sectors) of the economy. It needs balanced development of the all sectors. There is interdependent relationship among the different sectors in the economy, which is indicated by the Input-Output Analysis. The output of a sector is used as inputs by different sectors, and for the output of a sector it needs the output of other sectors or industry as inputs.

So with the information about the inter-industrial or sectoral relationship from the Input-Output analysis, fiscal policy can help in maintaining balanced development of the economy. For this, fiscal policy in the form of tax incentives like holidays, concessions, depreciation allowances for both the input supplying and absorbing sectors or industries is desirable. Similarly, public expenditure on creation of infrastructures and provision of subsidy also help in this concern. 

The next aspect of balanced development is the proportional development of different regions or areas of the country to minimize the disparities in economic prosperity. Fiscal policy, in consistent with the regional planning strategy, can help in this concern. Discriminator tax-policies favoring or providing incentives to the investors in relatively less developed areas along with public expenditure on creation of infrastructures and provision of subsidy may attract and promote economic activities in such regions. This will lead to prosperity of the less developed areas, and will promote the proportional balanced development of all regions of the country.

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Planning Programming Budgeting System (PPBS)

Planning Programming Budgeting System: Background


The traditional budgeting system (i.e. the Line-Item and Incremental) has been unsuitable and ineffective in the effective utilization of limited governmental resources as well as in the context of planning. There are some shortcomings or weaknesses of the traditional budgeting system as follows:
  1. emphasize on the objectives of control and accountability rather than allocation of limited resources on programmes and projects;
  2. provides information on the objects of expenditures, not the objectives of expenditure;
  3. does not help in analyzing and assessment of the impact of budget on the economy;
  4. emphasize on the incremental approach without due consideration of the necessity;
  5. emphasize on the financial performance rather than the physical;
  6. does not relate the current expenditure with the future budgetary repercussions

Success of planning needs improvements in budgeting system including others. John Beyer emphasizes that improvements in economic planning need, at first, a budgetary innovation to translate the plan decisions into reality. Similarly Caiden and Wildvasky have stated that planning is not worth much attention until the annual budget is made more meaningful.

History and Concept of Planning Programming Budgeting System (PPBS)


An innovation in the budgeting system is the planning programming budgeting system (PPBS). It is equally called the Performance and Programming Budgeting System as well as the Planning Programming Budgeting System. The Performance Budget was the outcome of the recommendation of the First Hoover Commission, 1949 in the USA. The Performance Budget is defined as;

“A performance budget is one which presents the purposes and objectives for which funds are requested, the costs of programmes proposed for achieving these objectives, and quantitative data measuring the accomplishments and work performance under each programme.” - Jesse Burkhead.

Performance budget is mainly to evaluate the work performance of government expenditures. Later, the term ‘programme’ was coined with the performance budgeting in 1957 as per the recommendation of the Second Hoover Commission. The Programme budget emphasizes on the need for budgetary management in the light of long term objectives.

PPBS was first introduced in the Defense Department in the USA in 1961 by Robert McNamara, and in all departments in 1965 until 1975. This system of budgeting is in practice in the form of Programme Budget in most of the countries mainly in case of development budget (introduced in Nepal since 2026 B.S. 

Stages of Planning Programming Budgeting System (PPBS)

  1. 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.
  2. 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.
  3. Functional Classification - The budget is classified on a functional basis like functions, programmes, projects and activities.
  4. Organization - Budget formulation addresses the organizational structure, managerial and administrative procedures of the programs/ projects/ activities.
  5. 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)

  1. It integrates the process of program/ project formulation, budget allocation and evaluation in a systematic way.
  2. It helps in the choice of programs/ projects, allocation of resources on them and performance evaluation for the executive and legislature.
  3. It integrates the decision makings regarding the choice of program/ projects to achieve the intended objectives.
  4. It attempts to promote maximum social advantage with the prudent (wise-full) use of scarce resources.
  5. 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)

This system of budgeting has not been effective in practice, even in the USA, and so in most of the countries. The reasons are pointed out as follows:
  1. 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.
  2. The problem arises in its application in case of multiple objectives of a program/ project that involves different agencies.
  3. It is difficult to acquire necessary information regarding performance evaluation and cost estimation in an uniform way in all governmental activities.
  4. It emphasizes on physical and financial performance, not on qualitative performance.
  5. It intends to centralize the budgetary decision makings.
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