GOVERNMENT OF ANDHRA PRADESH
FINANCE& PLANNING (FW.BG) DEPARTMENT
CIRCULAR MEMONo.15036-B/485/BG/A1/2000, Dated:22-4-2000.
Sub:- Zero-based Budgeting ¿ Financial Allocations under Non Plan
1. As part of wide ranging fiscal reforms, Government have decidedto adopt Zero-based Budgeting as an important policy to bring fiscal disciplinein all the departments. A CabinetSub-Committee comprising of fourMinisters is also constituted in G.O.Ms. No. 135, GA(Cabinet) Dept. dt.12.4.2000. The Committee met anddiscussed various issues on availability of resources and the need to bringabout greater economy and efficiency in the deployment of available manpowerand financial allocations under Plan and Non-plan. The Committee also recommended to constitute DepartmentalCommittees for Zero based budgeting comprising of Minister incharge of theDepartment as Chairman, concerned Secretaries and Heads of Departments,Secretary Planning and Secretary in the Finance Dept. as Members. Separate Government orders are issued inthis regard.
2. The Cabinet Sub-Committee also decided to communicate overallNon-plan and Plan allocations for each department as a basis to undertake theZero based budgeting exercise. Accordingly, the financial allocations under Non-plan are enclosedherewith for each Secretariat Department and for their Heads of Departments toundertake the exercise on Zero based budgeting. The allocations under Plan and corresponding guidelines are beingseparately issued by the Planning Department.
3. It is generally observed that whenever the Departments arerequested to make such an exercise, the general tendency has been to reduce theallocations under salaries and salaries related Heads and increase it for the otherSchemes and Programmes. Since there isno treasury control on drawal of salaries, such an exercise would adverselyaffect the overall cash flows of the Government because even though theDepartments would be under-providing salaries, in reality cash outflow onaccount of salaries would remain as per the actual requirement. Therefore, all the Departments are requestedthat while undertaking Zero based budgeting exercise, care should be taken toensure that salaries and other such related Heads under salaries shall be keptas indicated herewith for 2000-01..
4. It is also noticed that a number of bills have been pending forvarious Depts under Non-plan for 1999-2000. All the Departments should note that the allocations given herewith arethe final indications of the amounts available for each department. Therefore, they should make adequatearrangements to get the pending bills verified and resubmitted for paymentsalong with the certificate about the genuiness of the claim for which separate instructions are alsoissued. All Departments shall ensurethat pending commitments have first charge on the financial allocationsindicated herewith. While doing theZero-based budgeting exercise, they must limit their allocations for ongoingschemes as well as fresh proposals for this financial year to the extent ofbalances available only.
5. Government has also decided that review should be made by theDepartmental committes on zero based budgeting of all the schemes and workssanctiond before 31-3-2000. All schemes/workswhich were sanctioned upto 31-3-2000 but not acted upon or grounded shall betreated as lapsed or cancelled. Freshsanctions should be given after due justification before the CabinetSub-Committee. Hence, due care shouldbe taken to ensure that all such schemes/works which were sanctioned but notgrounded, should not find place in the pending commitments of the department.
6. It is also noticed that there has been a common tendency to makerequests for additional budget by many departments. It may kindly be noted that the budgetary allocations indicatedherewith are made on the basis of a realistic assessment of resourcesavailable. Until and unless furtherresources are raised or the expenditure in the existing budget is cut, there isno possibility to allow additional budget. Therefore, request for additional budget should not be made even in caseof any new priority scheme of the government or calamity. To meet such unforseen contingencies, thedepartment may consider setting apart 5% of their indicated allocation as alumsum provision. As such it should beclearly understood by the departments that the request for additional budgetwill be consider only when department is prepared to show reappropriation byway of cut in the expenditure or find savings under some otherHeads of account within the overall budget of the Department.
7. Subject to the aforesaid conditions, the Departments arewelcome to make savings, ifpossible, under the Non-planallocations indicated herewith. Anysuch savings shall be permitted to be retained by the Department forutilisation for any other priority scheme under Plan or Non-Plan.
8. In the light of the above, all the departments are requested tostart the exercise on Zero based budgeting and discuss in the DepartmentalCommittees constituted on Zero based budgeting under the Chairmanship of theconcerned Ministers and finalise their Non-Plan budget proposals and submitthem to the Finance Department for approval of Cabinet Sub-Committee on Zero based budgeting and theGovernment.
9. Departments are requested to complete this exercise within two weeks of the receipt ofthis Circular and place it before Cabinet Sub-Committee on zero based budgetingfor final approval.
Principal Secretary to Government
All Departments of Secretariat
and all Heads of Departments(with enclosure on
Non Plan allocation for2000-01).
PS to All Ministers
Secretary to Chief Minister
PS to Chief Secretary toGovernment
All Secretaries in Finance &Planning (F.W) Department
Peshi of Prl.Secretary Finance
//FORWARDED BY ORDER\\
C:\April_Zerobased\Zerobased budget-Circular 2004