Transcript
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CHAPTER I-Introduction
1.1 INTRODUCTION
Budget:
It is a blue print of the projected plan of action expressed in quantitative terms
and for a specified period of time.
Budgeting:
Budgeting is the act or process of setting budgets.
Budgeting Concepts:
The budget is helpful in defining the main objectives in business and in
determining its policy and also in assigning its responsibility. The budget is the best
instrument in coordinating the efforts of all members towards the same goal. The
controlling functions of the budget are
Comparison of results against estimates.
Analysing the differences between forecast and achievements taking necessary
decision at the appropriate times.
Preparation of budget:
The effectiveness for the budgeting is not on the system but on the method by
which it is applied.
The budgeted figures must be drawn up and coordinated by a competent
person.
The psychological factor counts for a great deal and the interest, appreciation
and cooperation of the managers must be maintained.
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The stipulated time intervals budget and cost control division is expected to issue
detailed reports comparing actual operating results with budget estimate. Such reports
are sent to department heads and to field officers responsible for various functional
activities.
Budget preparation in FCI:
The budget and cost control division in the head office is entrusted with the
responsibility of preparation of budget for the corporation as a whole, submission of
the same to the Board of Directors and forwarding to the Department of Food after
obtaining the approval of the Board of Directors. The performance budget is prepared
in three occurred in the current year and the ensuring year. This gives a board view of
capital expenditure, revenue expenditure, revenue income, operating results, source
and application of funds, purchases, sales, movement, and storage accommodation
and stock position.
The second volume deals with the various functional budgets like, purchases,
sales, movement, stock, port operations, shortages, personnel operation of various
processing plant etc., in these functional budget, the region-wise breakup of various
activities is given. The third volume contains the functions proposed to be performed
by the corporation in each and every region. This will give the full details of
purchases, sales, storage capacity, stocks, personnel, handling cost etc., in each
region. The allotment of funds to the regions for reverse and capital expenditure is
also contained in this volume.
Budgetary control in FCI:
Instructions are given to various offices in order to form a budget committee
in each office. The duties of budget committee are formulation of budget estimates
for the unit and exercising control over the same. For this purpose, the committee
should meet at least once in a month to review the various activities n the
District/Region/Zone as the case may be with reference to the estimates contained in
the budget.
The reason for variations between the actual and the estimates are to be
analyzed by these budget committees and a detailed note thereon should be prepared
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and submitted to the controlling officer/office. The budget and cost control division
in the head office obtains a monthly statement of expenditure on different heads of
accounts from the various offices. Thereafter, a detailed report is prepared at regular
intervals for submission to the management bringing out inter-alias purchases, sales,
volume of operations, storage capacity, staff in position, productivity per employee,
expenses per tonne of volume of operations etc.
Such a report brings to light the variations between actual and different
periods. Wherever, the actual tend to go up, the concerned regional offices are
instructed to initiate action for containing the expenses. Similar action should be
taken by the zonal offices and regional offices to review the position in their zones
and regions respectively. The zonal offices may bring out in their periodical reviews,The comparative position of various districts in the region.
1.2 INDUSTRY PROFILE:
The main objectives of the Government's price policy for agricultural produce, aims at
ensuring remunerative prices to the growers for their produce with a view to
encourage higher investment and production. Towards the end, minimum support
prices for major agricultural products are announced each year which are fixed after
taking into account, the recommendations of the Commission for Agricultural Costs
and Prices (CACP). The CACP while recommending prices takes into account all-
important factors, viz.
1. Cost of Production
2. Changes in Input Prices
3. Input/Output Price Parity4. Trends in Market Prices
5. Inter-crop Price Parity
6. Demand and Supply Situation
7. Effect on Industrial Cost Structure
8. Effect on General Price Level
9. Effect on Cost of Living
10. International Market Price Situation
11. Parity between Prices Paid and Prices Received by farmers (Terms of Trade).
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Of all the factors, cost of production is the most tangible factor and it takes into
account all operational and fixed demands. Government organises Price Support
Scheme(PSS) of the commodities, through various public and cooperative agencies
such as FCI, CCI, JCI, NAFED, Tobacco Board, etc., for which the MSPs are fixed.
For commodities not covered under PSS, Government also arranges for market
intervention on specific request from the States for specific quantity at a mutually
agreed price. The losses, if any, are borne by the Centre and State on 50:50 basis. The
price policy paid rich dividends. The Government have raised substantially the MSPs
in recent years as may be seen from the statement enclosed.
PROCUREMENT:
To nurture the Green Revolution, the Government of India introduced the scheme of
minimum assured price of foodgrains which are announced well before the
commencement of the crop seasons, after taking into account the cost of production \
inter-crop price parity, market prices and other relevant factors.
The Food Corporation of India along with other Government agencies provide
effective price assurance for wheat, paddy and coarsegrains.
FCI and the State Govt. agencies in consultation with the concerned State
Govts. establish large number of purchase centres throughout the state to
facilitate purchase of foodgrains
Centres are selected in such a manner that the farmers are not required to
cover more than 10 kms.to bring their produce to the nearest purchase centres
of major procuring states.
STORAGE:
Another facet of the Corporation's manifold activities is the provision of
scientific storage for the millions of tonnes of foodgrains procured by it. In
order to provide easy physical access in deficit, remote and inaccessible areas,
the FCI has a network of storage depots strategically located all over India.
These depots include silos, godowns and an indigenous method developed by
FCI, called Cover and Plinth (CAP).
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PRESERVATION:
The Food Corporation of India has an extensive and scientific stock
preservation system. An on-going programme sees that both prophylactic and
curative treatment is done timely and adequately. Grain in storage is
continuously scientifically graded, fumigated and aerated by qualified trained
and experienced personnel.
TRANSPORT:
Ensuring accessibility to food in a country of India's size is a Herculean task.
The foodgrains are transported from the surplus States to the deficit States.
The foodgrain surplus is mainly confined to the Northern States, transportation
involves long distance throughout the country. Stocks procured in the markets
and purchase centers is first collected in the nearest depot and from there
dispatched to the recipient States within a limited time.
FCI moves about 270 Lakh tonnes of foodgrains over an average distance of
1500 Kms.
DISTRIBUTION:
The national objective of growth with social justice and progressive improvements
in the living standards of the population make it imperative to ensure that
foodgrain is made available at reasonable prices.
STOCK:
The Central Pool stock are maintained by FCI and State Govts. and their
agencies.
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1.3 COMPANY PROFILE:
Food Corporation of India was setup under the Food Corporations Act 1964, in order
to fulfill following objectives of the Food policy :
Effective price support operations for safeguarding the interests of the farmers.
Distribution of food grains throughout the country for Public Distribution
System; and
Maintaining satisfactory level of operational and buffer stocks of food grainsto ensure National Food Security.
Since its inception in 1965, having handled various situations of plenty and scarcity,
FCI has successfully met the challenge of managing the complex task of providing
food security for the nation. A strong food security system which has helped to
sustain the high growth rate and maintain regular supply of wheat and rice right
through the year. The efficiency with which FCI tackled one of the worst droughts of
the century not only cemented its role as the premier organization in charge of food
security in India, but also brought it accolades from international organizations.
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ORGANISATION CHART:
Zonal Offices [ 5 ]
Regional Offices [ 23 ]
District Offices [ 166 ]
Depots (incl. CAP) [ 1451 ]
With 1646 offices, FCI is one of the largest networked organizations in India.
COMPANY OBJECTIVES:
To provide farmers remunerative prices.
To make food grains available at reasonable prices, particularly to vulnerable
section of the society .
To maintain buffer stocks as measure of Food Security .
To intervene in market for price stabilization.
QUALITY POLICY:
FCI, as the countrys nodal organization for implementing the National Food Policy,
is committed to provide credible, customer focused services, for efficient and
effective food security management in the country. Our focus shall be:
Professional excellence in Management of food grain and other commodities
Service quality and stake holder orientation
Transparency and accountability in transactions
Optimum utilization of resources
Continual improvement of systems, processes and resources
QUALITY OBJECTIVES:
Fulfillment of all the targets set as per Govt. of India Food Policy from time
to time.
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Monitoring of Quality in all major transactions, processes leading to improved
customer satisfaction level
Accountability for efficiency, responsiveness, performance and minimization
of all losses & Wastes
Need based up gradation of infrastructure and work environment
Need based enhancement of available knowledge & skills.
Transparency in decision making, effective communication leading to
harmonious employee relations
Establishing, maintaining and improving ISO 9001:2000 based Quality
Management Systems covering all areas of activity.
NEW INITIATIVES:
Having been acknowledged a major player in foodgrain management within the
Country and abroad, FCI is now endeavoring for
Resource mobilisation to reduce burden on food subsidy.
Better financial & Treasury Management.
Improved stock inventory management real time on-line system through a
recently launched IISFM ( Integrated Information System for Foodgrains
Management ) in collaboration with NIC.
Creation of Profit Centres.
Upgradation of technology through interface with Agriculture
Universities/Management Institutes.
Use of 'A' Twill texture gunny bags as against 'B' Twill bags as a project to
reduce losses in storage and transit.
Multimodal transportation system through riverine / container. Micro level Inventory Management through focused weekly movement plans.
VISION 2020:
To aggressively promote Decentralized Procurement by State Governments
with special emphasis in non-traditional areas and commodities.
To initiate procurement of non-MSP governed commodities on commercial
principles.
To ensure adequate buffer for meeting requirements under TPDS & Other
Welfare Schemes.
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To dispose off surplus and un-storage worthy godowns and introduce concepts
of mechanized handling in the conventional godowns.
To undertake R&D for conversion of some of the existing capacity to bulk and
cost effective utilization of existing bulk capacity.
To optimize monthly movement programme with existing state of art of
computerization within the country at various locations as per corporate
policies and priorities.
Modernization of Quality Control equipments and systems for food
preservation in order to increase the shelf life of food grain.
To venture in the fields of Forward Trading and Exports of both surplus stocks
of food grains in Central Pool and no-traditional commodities.
To introduce state of art of financial management in order to reduce the
dependency on the present banking system in the country.
To initiate systems for settlement of storage loss and transit loss through
insurance coverage and revised inventory mechanism.
To develop efficiency in human resource management both in staff/officers
and workers with changed circumstances in the work approach of P.S.U. s.
To achieve state of art in computerized communication between different
offices/ depots through out the country.
STRENGTH OF FCI:
Facilitator for food security
Provider of price & market assurance to the farmer
Ensuring steady food grain supplies to 5 Lakhs Fair Price Shops for PDS to
cover 141 million APL / 67 million card holders.
Ensuring food for All other Welfare Schemes.
Management Capability and Experience
Large pool of talent managing world's largest food grain operation on behalf
of Govt. of India
Enormity of Scale
Countrywide network of offices & strategically located Food Storage Depots.
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Operates in mandis/purchase centres located within 10 kms. proximity of
farmers.
Undertakes purchases of 30 to 40 million tonnes annually making it the largest
buyer in the world.
Effective market intervention to stabilize prices
State of the art experience on food grain preservation / Warehousing / Transportation
Management
Maintains the health of millions of tonnes of food grain in storage. Quality
acknowledge by International buyers.
Excellent Storage Management.
Timely movement of food grains from procuring States to consuming States.
OPPURTUNITIES:
After nearly four decades of varied experience in food management, FCI can
now play a wider role in being a food advisor to the Central/State Govts.
The Corporation can also play a more proactive role in the sphere of
commercial ventures.
To diversify into non traditional commodities / activities.
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CHAPTER II-Objectives & Methodology
2.1 NEED FOR THE STUDY
To control various expenditure by finding out the deviations by comparing the
actual performance with that of the standard .To know whether the intended purposes
have been accomplished. To analyze the benefits and identify the shortcoming and
give suggestions to improve the system.
2.2 OBJECTIVES OF THE STUDY:
PRIMARY OBJECTIVE:
To study on the effectiveness of budgetary system.
SECONDARY OBJECTIVES:
1. To compare the current administrative budget with the performance of
previous year.
2. To identify the shortcoming in the budget
3. To suggest remedial measures to overcome the shortcoming.
2.3 RESEARCH METHODOLOGY:
Research is any organized inquiry carried out to provide information
for solving problems. Business research is a systematic inquiry that provides
information to guide decisions. More specifically, it is a process of determining,acquiring, analyzing and synthesizing and disseminating relevant data, information
and insights to decision makers in ways that mobilize the organization to take
appropriate actions that, in turn, maximize business performance.
RESEARCH DESIGN:
The research design used in this study is analytical research.
Analytical research:
Analytical research is used to test pre-planned hypothesis, based on
existing knowledge or findings. Sometimes analytical research is called evaluative, as
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it determines the strength of a possible relationship between an exposure or
intervention and outcome.
SOURCES OF DATA:
The data used in this study is secondary source of data.
The data used is collected from companys website, manuals, internet
books and other records relating to finance in the organization.
STUDY PERIOD:
Period of study is 3 months.
2.4 LIMITATIONS OF THE STUDY:
Limiting factor in this study is the data available.
The break ups for the budget estimates are not sufficient.
Time period for the study is only 3 months.
2.5 REVIEW OF LITERATURE:
In the year 1996, Dr Pem lal joshi, Dr Jasim Abdulla reported on the
topic Budgetary control and performance evaluation systems in the journal
Asian review of accounting and portrayed that this study examines some
aspects of budgetary control and performance valuation systems by utilising
data based on a questionnaire survey of 42 medium and large size companies
located in the State of Bahrain. The study finds that the onventional form of
budget controllability principle is practised to a great extent; managers end to
create slack to meet future uncertainty; the focus is on short-term performance
evaluation; a mixed type of performance evaluation style is followed; budget
variances are used to evaluate managers' ability, and for cost control purposes.
Bonus is affected by budget performance along with new assignments, but not
salary.
In the year 2008, Ishola Rufus Akintoye reported on the topic budget
and budgetary control for improved performance in European journal of economics,finance and administrative sciences and portrayed the impact of budget and budgetary
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control in the performance of the company, in most of the cases considered the result
established the presence of a strong relationship between turnover as a budget variable
and performance indicators and advised managers and business operators to pay more
attention to their budgetary control systems to improve their performances.
THEORITICAL FRAMEWORK:
Budget:
It is a blue print of the projected plan of action expressed in quantitative terms
and for a specified period of time.
Budgeting:
Budgeting is the act or process of setting budgets
Budgetary control:
Budgetary control is a set of techniques which involves the establishment of
departmental and functional budgets, comparison between budgeted and actual results
and analysis of the reasons for variations, either to achieve the planned objectives
through corrective actions or provide a basis for their revision.
Estimate:
Scientific guess relating to event or phenomenon.
Forecast:
Estimate for the future only.
Administrative overhead budget:
It covers the administrative expenses including the salaries of administrative
and managerial staff. A careful analysis of the needs of all administrative
departments is necessary. The budget for the entire administrative function is
obtained by integrating the separate budgets of all administrative departments.
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Cash budget:
It is a summary of expected cash inflows and outflows over a particular period
of time. In other words, cash budget involves a projection of future cash receipts and
cash disbursements over various time intervals.
A cash budget helps the management in:
Determining the future cash needs.
Planning for financing of these needs.
Exercising control over cash.
Equity budget:
A plan of expenditure involving the acquisition, creation or expansion of fixed
assets is generally referred to as a equity expenditure budget or capital budget.
Estimates of equity requirements are generally prepared after a comparative
evaluation of the various opportunities and alternatives. Equity expenditure is often
carried over from one year to the other depending upon the nature of the investment
project. Thus the annual equity budget makes provision for carryovers of approved
projects along with additional expenditure to be incurred during the budget period.
Sales budget:
This budget is based on projected sales to be achieved in a budget period.
The sale functions of the corporation comprise of:
Issue of food grains from the central pool.
Issues under various welfare schemes of Govt. of India.
Sale of wheat in open market.
Export.
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Performance Budgeting:
Budgeting is the technique of expressing, largely in financial terms, the
managements plans for operating and financing 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.
Performance budgeting involves evaluation of the performance of the
organization in the context of both specific, as well as, overall objectives of the
organization. It provides a definite direction to each employee and also a control
mechanism to higher management. It requires preparation of periodic performance
reports showing variances.
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CHAPTER III-Analysis & Interpretation
3.1 DATA ANALYSIS:
BUDGETING PERFORMANCE:
The performances have been studied by evaluating the difference of
the budget estimate and revised estimate of a particular year. Generally, the revision
in the budget is done at the end of a particular financial year in order to benefit the
actual expenses, which have occurred during that financial year.
The budgeting performance of the budgets are evolved by evaluating
the percentage of difference between the budget estimate and its revision.
Formula:
Percentage change between budgeted estimate and actual administrative
expense
= ((Budgeted estimate Revised Estimate)/Budgeted Estimate)*100
TABLE NO.3.1.1: STUDY OF BUDGETING PERFORMANCE FOR THE
YEAR 2005-2006
SI.NO Particulars Difference
in
amount(Rs.
in lakhs)
Percentage
%
Increase/Decrease
1. Advertisement NIL
2. Audit fees NIL
3. Bank Commission NIL
4. Books and
Periodicals
NIL
5. Computer
applications
1 Increase
6. Computer
Stationery
NIL
7. Data entry work 1.5 Increase
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8. Data processing
and
communication
2 Increase
9. Electricity 1 5 increase
10. Entertainment 2 decrease11. Exp. On Hindi
promotion
NIL
12. Exp. On
Tea/Coffee etc.
within office
premises
1 Increase
13. Exp. On
Tea/Coffee etc.
outside office
premises
1 Increase
14. Expenditure
incurred by M.O
NIL
15. Expenses on
training
0.5 Increase
16. Insurance NIL
17. ISO certification
fees
7 Increase
18. Legal fees 1.25 71 Increase
19. Maintenance of
computer
NIL
20. Maintenance of
vehicles
NIL
21. Maintenance on
holiday
homes/Guest
houses
5 Increase
22. Medical-fixed 3 33 Decrease
23. Medical-others 49 188 Increase
24. OTA 1.5 70 Increase
25. Other sundry
Expenses
NIL
26. Pay and
allowances and
contribution(excl.
medical and OTA)
28 2.8 Increase
27. Photostat charges .5 50 Increase
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28. Postage NIL
29. PR&Publicity NIL
30. Printing and
stationery
NIL
31. Reimburs. Of
Travelling exp.
Etc to retired
employees
1.5 Increase
32. Reimbursement of
local conveyance
.05 Increase
33. Rent 4 20 Decrease
34. Repair and
maintenance
NIL
35. Sundry articles for office use
NIL
36. Taxes NIL
37. Taxi hiring
charges
NIL
38. Telegram and
telex
2 Increase
39. Telephone(incl.
fax /mobile)
2 Decrease
40. Transport charges
for sundry articles
.1 Increase
41. Travellingexpenses
NIL
42. Water charges .5 Increase
43. Welfare .5 2.5 Decrease
Minor
Capital
Assets
44. Duplicators(incl.
photocopiers)
3 54.5 Decrease
45. Franking
Machines
.75 Increase
46. Furniture and
fittings(incl. fans)
NIL
47. Intercom
equipments
.25 50 Increase
48. Other equipments NIL
49. Typewriters NIL
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Interpretations:
Medical:
The budget estimate of medical expenses is Rs. 26 lakhs whereas the revised
estimate is Rs. 75 lakhs. This shows there is an increase of 49 lakhs. This shows a
percentage increase of 188%.
Reasons:
Medical expenses under impatient scheme should be more.
Medical expenses under outpatient scheme for certain category of employees
should be high and expenses related with medicine, treatment have been distributed to
the employees in this year.
Pay and allowances and contribution:
The expenses for pay and allowances and contribution has been estimated of
Rs. 979 lakhs and the revision is made for Rs. 1007 lakhs. The difference in amount
is of Rs. 28 lakhs increase than the estimate. This shows a percentage increase of
2.8%.
Reasons:Increase in the strength of the employees due to transfer from other states.
Gratuity payments should be high during this year, due to more number of
retirements.
Increase in strength of some category of employees in the organizations, like
laborers, daily wage workers.
Rent:
The budget estimate of rent is Rs. 20 lakhs and the revised estimate is Rs. 16
lakhs. The difference shows a decrease of Rs. 4 lakhs. This shows a percentage
decrease of 20%.
Reasons:
Decrease in rental charges is due to shifting of employees from rented
premises to own building.
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Advertisement:
The budget estimate of advertisement is Rs.21lakhs and fifty thousand and the
revised estimate is Rs.21lakhs and fifty thousand. This shows both the estimates are
same.
Computer applications:
The budget estimate of computer applications is nil and the revised estimate is
Rs. 1akh.
Reasons:
The need for the computer application is recognized and the estimate is
revised.
Data entry work:
The revised estimate of data entry work is Rs. 1.5lakhs.
Reasons:
Data entry work is given to third parties and so the estimate is revised to Rs.
1.5lakhs.
Electricity:The budget estimate of Electricity is Rs. 18lakhs and the revised estimate is
Rs. 19lakhs. This shows only a small difference of 5%.
TABLE NO.3.1.2: STUDY OF BUDGETING PERFORMANCE FOR THE
YEAR 2006-2007
SI.NO Particulars Difference inamount. (Rs.
in lakhs)
(2006-07)
Percentagechange Increase/Decrease
1. Advertisement NIL
2. Audit fees NIL
3. Bank Commission NIL
4. Books and
Periodicals
NIL
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5. Computer
applications
NIL
6. Computer
Stationery
.25 Increase
7. Data entry work NIL
8. Data processing
and
communication
NIL
9. Electricity 2 10.5 Increase
10. Entertainment NIL
11. Exp. On Hindi
promotion
NIL
12. Exp. Other thangift for Parliam.
Consultative
Committee
20 Increase
13. Expenditure
incurred by M.O
NIL
14. Expenses on
training
9.5 1900 Increase
15. Insurance .05 16
16. ISO certification
fees
.NIL
17. Legal fees NIL
18. Maintenance of
computer
NIL
19. Maintenance of
vehicles
NIL
20. Maintenance on
holiday
homes/Guest
houses
1 20 Increase
21. Medical-fixed 1 15 Increase
22. Medical-others NIL
23. OTA 1 33 Increase
24. Other sundry
Expenses
3 100 Increase
25. Pay and
allowances and
contribution(excl.medical and OTA)
NIL
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26. Photostat charges NIL
27. Postage 1 50 Increase
28. PR&Publicity NIL
29. Printing and
stationery
1.5 17 Increase
30. Reimburs. Of
Travelling exp.
Etc to retired
employees
1.5 Decrease
31. Reimbursement of
local conveyance
.3 600 Increase
32. Rent NIL
33. Repair and
maintenance
2 11 Increase
34. Sundry articles for
office use
1 33 Increase
35. Taxes .5 16 Increase
36. Taxi hiring
charges
NIL
37. Telegram and
telex
2 Increase
38. Telephone(incl.fax /mobile)
3 37.5 Increase
39. Travelling
expenses
NIL
40. Water charges .5 100 Increase
41. Welfare NIL
Minor
Capital
Assets
42. Duplicators(incl.photocopiers) NIL
43. Franking
Machines
NIL
44. Furniture and
fittings(incl. fans)
NIL
45. Intercom
equipments
.25 33 Increase
46. Other equipments NIL
47. Typewriters NIL
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Interpretations:
Expenses other than gift:
The allocation for expenses other than gift have increased to Rs. 20 lakhs
during this year.
Reasons:
The expenses for the parliamentary consultative committee such as traveling
expenses, expenses on boarding and lodging etc., is more during this year.
Expenses on training:
The expenses on training has been estimated as Rs. 50,000 and the revised
estimate during the year is Rs.10lakhs. This shows an increase in amount of Rs. 9
lakhs and 50,000.
Reasons:
The difference is due to the training given to the employees to gain computer
knowledge.
Medical expenses:
The budget estimate for medical expenses is Rs. 85lakhs and the revisedestimate is Rs.85lakhs. This shows there is no change in the estimates.
Pay and allowances:
The budget and the revised estimates of pay and allowances is Rs. 1102lakhs.
Both the estimates are same during this year.
OTA:
The budget estimate of OTA is Rs. 3lakhs and the revised estimate is Rs.
4lakhs. The difference is Rs. 1lakh. The percentage shows an increase of 33%.
Rent:
The budget estimate and the revised estimate of rent is Rs. 15lakhs. This
shows no difference in percentage.
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Traveling expenses:
The budget estimate and the revised estimate for traveling expenses is
Rs.33lakhs. This shows both the estimates are same.
TABLE NO.3.1.3: STUDY OF BUDGETING PERFORMANCE FOR THE
YEAR 2007-2008
SI.NO Particulars Difference in
amount(Rs. in
lakhs)
(2007-08)
Percentage
change
Increase/Decrease
1. Advertisement NIL
2. Audit fees .5 50 Increase
3. Bank Commission NIL
4. Books and
Periodicals
NIL
5. Computer
applications
1 Decrease
6. Computer
Stationery
NIL
7. Daily wages 1 Increase
8. Data entry work NIL
8. Data processing
and
communication
NIL
9. Electricity NIL
10. Entertainment .5 100 Increase
11. Exp. On gift for
parliamentary
consultative
committee
.25 Increase
12. Exp. On Hindi
promotion
.25 16 Increase
13. Exp. On
Tea/Coffee etc.
within office
premises
.5 33 Increase
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14. Exp. On
Tea/Coffee etc.
outside office
premises
1 100 Increase
15. Exp. other than
gift for parliam.
Consultative
committee
10 Decrease
16. Expenditure
incurred by M.O
NIL
17. Expenses on
training
NIL
18. Insurance NIL
17. ISO certificationfees
NIL
18. Legal fees 1 33 Increase
19. Maintenance of
computer
2 50 Increase
20. Maintenance of
vehicles
1.5 42 Increase
21. Maintenance on
holiday
homes/Guest
houses
1.5 23 Decrease
22. Medical-fixed NIL
23. Medical-others 10 14 Increase
24. OTA 2 40 Increase
25. Other sundry
Expenses
.12 1 Increase
26. Pay and
allowances andcontribution(excl.
medical and OTA)
100 10 Increase
27. Photostat charges NIL
28. Postage NIL
29. PR&Publicity .45 900 Increase
30. Printing and
stationery
2 20 Increase
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31. Reimburs. Of
Travelling exp.
Etc to retired
employees
2 Increase
32. Reimbursement of
local conveyance
NIL
33. Rent 1 8 Increase
34. Repair and
maintenance
7 39 Increase
35. Sundry articles for
office use
1 25 Increase
36. Taxes NIL
37. Taxi hiring
charges
.5 100 Increase
38. Telegram and
telex
NIL
39. Telephone(incl.
fax /mobile)
1 9 Increase
40. Transport charges
for sundry articles
NIL
41. Travelling
expenses
15 50 Increase
42. Water charges 1 100 Increase
43. Welfare 2 11 Increase
Minor
Capital
Assets
44. Duplicators(incl.
photocopiers)
NIL
45. Franking
Machines
NIL
46. Furniture and
fittings(incl. fans)
NIL
47. Intercom
equipments
.25 33 Increase
48. Other equipments NIL
49. Typewriters NIL
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Interpretations:
Pay and allowances:
The estimate for pay and allowances shows an increase of Rs.100lakhs.
reasons:
Due to increase in the number of patients.
Surgeries conducted will be more.
Medical:
The budget estimate for medical expenses is Rs. 70lakhs and the revised
estimate is Rs. 80lakhs. The difference shows an increase of Rs. 10lakhs.
Reasons:
Due to increase in number of patients.
The number of surgeries is more in this year.
Traveling expenses:
Traveling expenses is estimated as Rs. 30lakhs and the revised estimate is Rs.
45lakhs. This shows an increase of Rs. 15lakhs.
Reasons:
Due to increase in number of tours of vigilance committee.
In this year leave travel concession should have been given to employees.
Expenses on training:
The budget and revised estimates of expenses on training is Rs. 10.5lakhs.
There is no difference between the two estimates.
OTA:
The budget estimate of OTA is Rs. 5lakhs and the revised estimate is Rs.
7lakhs. This shows difference in amount of Rs. 2lakhs and the percentage difference
is 40%.
Rent:
The expenses on rent is estimated as Rs. 12.5lakhs and the revised estimate is
Rs. 11.5lakhs. There is a difference in amount of Rs. 1lakh. The percentage shows a
decrease of 8%.
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Advertisement:
The budget and the revised estimates for advertisement during this year is
Rs.11lakhs. Percentage change is nil in this year.
Electricity:
The expenses on electricity is estimated as Rs. 22lakhs in this year and the
revised estimate is also Rs. 22lakhs. This shows there is no change in the estimates.
COMPARISON OF BUDGET ESTIMATES FROM THE YEAR 2005 TO 2009:
TABLE NO 3.1.4 MEDICAL EXPENSES
S.NO YEAR MEDICAL EXPENSES(Rs. In lakhs)
1. 2005-06 26
2. 2006-07 85
3. 2007-08 70
4. 2008-09 80
Interpretation:
The budget estimate of medical expenses for the year 2005-06 is
26lakhs, the estimate for the year 2006-07 is 85lakhs, the estimate for the year 2007-
08 is 70lakhs and the estimate for the year 2008-09 is 80lakhs. The medical expenses
has been increased from the year 2006-07 which is due to the increase in the number
of employees and the expenses under impatient and outpatient scheme is increased.
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FIGURE NO.3.1.4
M e d ic a l e x p
2 6
8 5
7
8
0
2 0
4 0
6 0
8 0
1 0 0
2 0 0 5 - 0 6 2 0 0 6 - 0 7 2 0 0 7 - 0 8 2 0 0 8 -
y e a
rupee
s
in
lakhs
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TABLE NO. 3.1.5: PAY AND ALLOWANCES
S.NO YEAR PAY AND
ALLOWANCES (Rs. In
lakhs)
1. 2005-06 979
2. 2006-07 1102
3. 2007-08 1000
4. 2008-09 1200
Interpretation:
The estimate for the year 2005-06 is 979lakhs, for the year 2006-07 is
1102lakhs, for the year 2007-08 is 1000lakhs and the estimate for the year 2008-09 is
1200lakhs. This shows there is not much difference in the estimates.
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TABLE NO. 3.1.6: EXPENSES ON TRAINING
S.NO YEAR EXPENSES ON
TRAINING(Rs. in lakhs)
1. 2005-06 0
2. 2006-07 0.5
3. 2007-08 10.5
4. 2008-09 12
Interpretation:
The budget estimate for the expenses on training has been increased
from the year 2007-08 due to introduction of computerized operations in all districts
and started training programs at a large level for employees to improve their
knowledge.
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FIGURE NO.3.1.6
E x p e n s e s o n t
00 .
1 0 .
1 2
0
2
46
8
1 0
1 2
1 4
2 0 0 5 - 0 6 2 0 0 6 - 0 7 2 0 0 7 - 0 8 2 0 0 8 - 0
y e a
rupees
in
lakhs
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TABLE NO.3.1.7: TRAVELING EXPENSES
S.NO YEAR TRAVELING
EXPENSES(Rs. In lakhs)
1. 2005-06 30
2. 2006-07 333. 2007-08 30
4. 2008-09 45
Interpretation:
The estimate for the traveling expenses for the year 2005-06 is 30lakhs
and for the year 2006-07 is 33lakhs, the estimate for the year 2007-08 is 30lakhs, the
estimate for the year 2008-09 is 45lakhs. The traveling expenses for the year2008-09
increased due to encashment and availing of leave travel allowance (LTC).
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FIGURE NO.3.1.7
T r a v e l in g e x
3 03
3
4 5
0
1 0
2 0
3 0
4 0
5 0
2 0 0 5 - 0 6 2 0 0 6 - 0 7 2 0 0 7 - 0 8 2 0 0 8 - 0 9
y e a
rupees
in
lakhs
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TABLE NO.3.1.8: OTA
S.NO YEAR OTA(Rs.in lakhs)
1. 2005-06 2
2. 2006-07 3
3. 2007-08 5
4. 2008-09 7
Interpretation:
The estimate for OTA for the year 2005-06 is Rs. 2lakhs, the estimate for the year
2006-07 is Rs. 3lakhs, the estimate for the year 2007-08 is Rs. 5lakhs and for the year
2008-09 is Rs.7lakhs. This shows slight increase in the estimates.
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FIGURE NO.3.1.8
OTA
2
3
5
7
0
1
2
3
4
5
6
7
8
2005-06 2006-07 2007-08 2008-09
year
rup
ees
in
lakhs
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TABLE NO.3.1.9: RENT
S.NO YEAR RENT(Rs. in lakhs)
1. 2005-06 20
2. 2006-07 25
3. 2007-08 12.5
4. 2008-09 10
Interpretation:
The estimate for the year 2005-06 is Rs. 20lakhs, for the year 2006-07 is Rs.25lakhs, for the year 2007-08 is Rs. 12.5lakhs and the estimate for the year 2008-09 is
Rs. 10lakhs. This shows slight fluctuations in the estimates.
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FIGURE NO.3.1.9
R E N
2 0
2 5
1 2 .1 0
0
5
1 0
1 52 0
2 5
3 0
2 0 0 5 -0 6 2 0 0 6 -0 7 2 0 0 7 -0 8 2 0 0 8 -0 9
y e a
rupeesin
lakhs
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TABLE NO.3.1.10: ELECTRICITY
S.NO YEAR ELECTRICITY(Rs. in
lakhs)
1. 2005-06 18
2. 2006-07 19
3. 2007-08 22
4. 2008-09 22
Interpretation:
The estimates for electricity for the year 2005-06 is Rs. 18lakhs, for the year
2006-07 is Rs. 19lakhs, for the year 2007-08 is Rs.22lakhs and for the year 2008-09 is
Rs.22lakhs. This shows the estimates of electricity shows slight variations between
the years 2005-07 and during the years 2007-09 the estimates are same.
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FIGURE NO.3.1.10
E L E C T R I C
1 8 1 9
2 2 2 2
0
5
1 0
1 5
2 0
2 5
2 0 0 5 -0 6 2 0 0 6 -0 7 2 0 0 7 -0 8 2 0 0 8 -0 9
y e a
rupee
sin
lakhs
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TABLE NO: 3.1.11: COMPARISON OF BUDGET ESTIMATES AND
REVISED ESTIMATES FOR THE YEARS 2005-08
Year Budget
Estimate(Rs.
in lakhs)
Revised
Estimate(Rs.
in lakhs)
Percentage
change
Increase/Decrease
2005-06 1239.15 1330.05 7.33 Increase
2006-07 1417.7 1462.55 3.16 Increase
2007-08 1338.38 1480.95 10.6 Increase
Interpretation:
From the table it is inferred that the budget and revised estimates
shows an increase in percentage from the year 2005 to 2008.
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FIGURE NO.3.1.11
C O M P A R IS O N O F B U D G E T A N DE S T I M A T E S
1 2 3 9 . 1
1 4 1 7 .
1 3 3 8 . 31 3 3 0 . 0
1 4 6 2 . 5 1 4 8 0 . 9
1 1 0 0
1 2 0 0
1 3 0 0
1 4 0 0
1 5 0 0
2 0 05 -0 6 2 00 6 -0 7 2 00 7 -0 8
y e a
rupees
in
lakhs
B u dg et E s t im a t
la k h s )
R e vis e d E s t im a t
la k h s )
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TABLE NO: 3.1.12: COMPARISON OF BUDGET ESTIMATES FOR THE
YEARS 2005-09
Year Budget
Estimate(Rs. in
lakhs)
2005-06 1239.15
2006-07 1417.7
2007-08 1338.38
2008-09 1561.4
Interpretation:
From the table it is inferred that the budgeted estimates shows an
increase from the year 2005 to 2008. The percentage difference between the years
2005-06 and 2006-07 is 14% and the percentage difference between the years 2006-
07 and 2007-08 is 5.6% and percentage difference between the years 2007-08 and
2008-09 is 16.7%. This shows there are fluctuations between the budget estimates.
FIGURE NO.3.1.12
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CHAPTER IV-Findings & Suggestions
4.1 FINDINGS
COMPARISON OF 2005-06 BUDGET ESTIMATE WITH 2006-07
BUDGET ESTIMATE:
Medical:
The estimate for the year 2005-06 is Rs. 26lakhs and the estimate for
the year 2006-07 is Rs. 85lakhs. There is an increase of Rs 59lakhs. The
percentage of difference shows an increase at 226%.
Pay and allowances:
The budget estimate for the year 2005-06 is Rs. 979lakhs and the
estimate for the year 2006-07 is Rs. 1102lakhs. There is an increase of
123lakhs. The percentage of difference shows an increase at 12.5%.
Advertisement:
The budget estimate for the year 2005-06 is Rs.21.5 and the estimate
for the year 2006-07 is Rs. 12.5lakhs. There is a decrease of Rs. 9lakhs. The
difference in percentage shows a decrease of 41.8%.
COMPARISON OF 2006-07 BUDGET ESTIMATE WITH 2007-08
BUDGET ESTIMATE
Expenses on training:
The budget estimate for the year 2006-07 is Rs. 50000 and the estimate
for the year 2007-08 is Rs. 10lakhs and fifty thousand. There is an increase of
Rs. 10lakhs. The difference shows an increase of 1900%.
Medical:
The budget estimate for the year 2006-07 is Rs. 85lakhs and the
estimate for the year 2007-08 is Rs. 70lakhs. The difference is
Rs.15lakhs which shows decrease in medical expenses. The difference
in percentage shows 17.6%.
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The budgeting system will be effective if the allocations for expenses
on training, traveling expenses and medical expenses are given much
importance.
SHORTCOMINGS:
From the study of finding the effectiveness of the budgetary system, the
comparison of the past four years budget estimates shows some shortcomings, they
are,
Medical expenses:
There exists fluctuations in the four years budget and also there exists
changes between each years budgeted and revised estimate. Since the medical
expenses are decided by the management at the Head Quarters, New Delhi.
According to the provisions of the law and the budgeted plans of the team at New
Delhi they put forth the estimates for various zones and districts of the office.
Expenses on training:
There exists difference between the budgeted estimate and the revised
estimate for all the four years and also there are differences in the budget estimates in
the year 2007-08. By understanding the need for training in increasing the knowledge
of employees in the current scenario, the organization has introduced training
programs for employees and also to update the knowledge of employees in the
computer operations.
Traveling expenses:
Traveling expenses are more during the year 2008-09. Every four
years the organization is giving the employees an opportunity to avail the Leave
Travel Allowance (LTC) or encashment of LTC.
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4.2 SUGGESTIONS
The following are some of the costs that show fluctuations between periods
and show differences in the budget and revised estimate.
Medical expenses
Traveling expense
Expenses on training
The following are the measures to overcome the shortcomings in the budget of
the organization.
For the above expenditures, the management must put in care to ensure that
the budget estimate is able to meet out the actual expenditure incurring during each
year and so effective planning should be made with respect to these costs in order to
perform more efficiently. This will enable to perform the overall function and
operations of the administrative office within the allocated limits.
Monthly statement of the staff and administration costs can be prepared and
comparing the actual with the budget estimates to know whether they are exceeding
the monthly pro rata of budget estimate. This statement will be helpful to overcome
the shortcomings by identifying it on a monthly basis.
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4.3 CONCLUSION
Food Corporation of India is offering good service to the society through the
sale of food grains to the consumers in a subsidized rate through the public
distribution system(PDS). For this organization, budgeting system is a very important
area for the performance of functions and operations. For effective functioning of the
routine activities, the funds have to be used within the permissible limit of allocated
estimate, since they have restrictions in transferring funds from one administrative
head to another.
. Some of the costs show variations between periods and for those management
have to take some initiatives and efforts during budget plans. The budget estimates are
made with reference to previous year expenses and estimates.
Thus the operations with regard to the budgetary system of FCI, Chennai will be
effective by proper planning and if the shortcomings mentioned above are corrected
by preparing the budget estimates to overcome the shortcomings.
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APPENDIX
Budget allocation for 2005-06(RE) and 2006-07(BE):
Name of zonal office/Region ZO (SOUTH)
Account Head 2005-06(BE)
in Lakhs
2005-06(RE)
in Lakhs
2006-07
in LakhsAdvertisement 21.50 21.50 12.50
Audit Fees 2.00 2.00 1.75
Bank Commission 18.00 18.00 15.00
Books &
Periodicals
2.00 2.00 2.00
Computer
Applications
0.00 1.00 1.00
Computer
Stationary
2.00 2.00 1.75
Data Entry Work 0.00 1.50 2.00
Data Processing &
Communication
0.00 2.00 2.00
Electricity 18.00 19.00 19.00
Entertainment 3.00 1.00 1.00
Exp. On Hindi
promotion
1.50 1.50 1.50
Exp. On Tea/Coffee
etc. within office
premises
0.00 1.00 1.00
Exp. On Tea/Coffee
outside office
premises
0.00 1.00 1.00
Expenditure
incurred by M.O
0.40 0.40 0.40
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Expenses on
Training
0.00 0.50 0.50
Insurance 0.30 0.30 0.30
ISO Certification
Fees
0.00 7.00 1.00
Legal Fees 1.75 3.00 3.00
Maintenance of
Computer
4.00 4.00 4.00
Maintenance of
Vehicles
5.00 5.00 5.00
Maintenance on
Holiday
Homes/Guest
Houses
0.00 5.00 5.00
Medical Fixed 9.00 6.00 6.50
Medical Others 26.00 75.00 85.00
OTA 2.00 3.50 3.00
Other Sundry
Expenses
3.00 3.00 3.00
Pay & Allowances
and Contribution
(excl. Medical &
OTA)
979.00 1007.00 1102.00
Photostat Charges 0.50 1.00 1.00
Postage 2.00 2.00 2.00
PR & Publicity 0.10 0.10 0.10
Printing &
Stationary
8.00 8.00 8.50
Reimbursement Of
Traveling Exp. Etc.
to retired employees
0.00 1.50 1.50
Reimbursement of
Local Conveyance
0.00 0.05 0.05
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Rent 20.00 16.00 15.00
Repair
& Maintenance
18.00 18.00 18.00
Sundry articles for
office use
2.00 2.00 3.00
Taxes 3.00 3.00 3.00
Taxi Hiring
Charges
0.50 0.50 0.50
Telegram & Telex 0.00 2.00 2.00
Telephone (incl
Fax/Mobile)
10.00 8.00 8.00
Transport Charges
for Sundry Articles
0.00 0.10 0.10
Traveling Expenses 30.00 30.00 33.00
Water Charges 0.00 0.50 0.50
Welfare 20.00 19.50 20.00
Group Minor Capital Assets
Duplicators (incl.
Photocopiers)
5.50 2.50 2.00
Franking Machines 0.00 0.75 0.75
Furniture &
Fittings(incl. Fans)
10.00 10.00 7.5
Intercom
Equipments
0.50 0.75 0.75
Other Equipments 10.00 10.00 10.00
Typewriter 0.60 0.60 0.25
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Budget allocation for 2006-07(RE) and 2007-08(BE):
Name of zonal office/Region ZO (SOUTH)
Account Head 2006-07(BE)
in Lakhs
2006-07(RE)
in Lakhs
2007-08
in LakhsAdvertisement 12.50 12.50 11.00
Audit Fees 1.75 1.75 1.00
Bank Commission 15.00 15.00 15.00
Books &
Periodicals
2.00 2.00 1.50
Computer
Applications
1.00 1.00 1.00
Computer
Stationary
1.75 2.00 2.00
Data Entry Work 2.00 2.00 0.50
Data Processing &
Communication
2.00 2.00 2.00
Electricity 19.00 21.00 22.00
Entertainment 1.00 1.00 0.50
Exp. On Hindi
promotion
1.50 1.50 1.50
Exp. On Tea/Coffee
etc. within office
premises
1.00 1.50 1.50
Exp. On Tea/Coffee
Outside office
premises.
1.00 1.00 1.00
Expenses other than
gift for parliam.
Consultative
committee.
0.00 20.00 10.00
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Expenditure
incurred by M.O
0.40 0.40 0.40
Expenses on
Training
0.50 10.00 10.00
Insurance 0.30 0.35 0.40
ISO Certification
Fees
1.00 1.00 0.50
Legal Fees 3.00 3.00 3.00
Maintenance of
Computer
4.00 4.00 4.00
Maintenance of
Vehicles
5.00 5.00 3.50
Maintenance on
Holiday
Homes/Guest
Houses
5.00 6.00 6.50
Medical Fixed 6.50 7.50 7.50
Medical Others 85.00 85.00 70.00
OTA 3.00 4.00 5.00
Other Sundry
Expenses
3.00 6.00 6.00
Pay & Allowances
and Contribution
(excl. Medical &
OTA)
1102.00 1102.00 1000.00
Photostat Charges 1.00 1.00 1.00
Postage 2.00 3.00 3.00
PR & Publicity 0.10 0.10 0.05
Printing &
Stationary
8.50 10.00 10.00
Reimbursement Of
Traveling Exp. Etc.
to retired employees
1.50 0.00 0.00
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Reimbursement of
Local Conveyance
0.05 0.35 0.50
Rent 15.00 15.00 12.50
Repair
& Maintenance
18.00 20.00 18.00
Sundry articles for
office use
3.00 4.00 4.00
Taxes 3.00 3.50 3.00
Taxi Hiring
Charges
0.50 0.50 0.50
Telegram & Telex 2.00 0.00 0.00
Telephone (incl
Fax/Mobile)
8.00 11.00 11.00
Transport Charges
for Sundry Articles
0.10 0.10 0.10
Traveling Expenses 33.00 33.00 30.00
Water Charges 0.50 1.00 1.00
Welfare 20.00 20.00 18.00
Group Minor Capital Assets
Duplicators (incl.
Photocopiers)
2.00 2.00 2.00
Franking Machines 0.75 0.75 1.00
Furniture &
Fittings(incl. Fans)
7.50 7.50 6.00
Intercom
Equipments
0.75 1.00 0.75
Other Equipments 10.00 10.00 8.00Typewriter 0.25 0.25 0.20
Budget allocation for 2007-08(RE) and 2008-09(BE):
Name of zonal office/Region ZO (SOUTH)
Account Head 2007-08(BE)
in Lakhs
2007-08(RE)
in Lakhs
2008-09
in Lakhs
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Advertisement 11..00 11..00 10.00
Audit Fees 1.00 1.50 1.50
Bank Commission 15.00 15.00 15.00
Books &
Periodicals
1.50 1.50 1.50
Computer
Applications
1.00 NIL NIL
Computer
Stationary
2.00 2.00 2.00
Daily Wages 0.00 1.00 1.00
Data Entry Work 0.50 0.50 0.50
Data Processing &
Communication
2.00 2.00 2.00
Electricity 22.00 22.00 22.00
Entertainment 0.50 1.00 1.00
Exp. On Gift for
Parliamentary
Consultative
Committee
0.00 0.25 0.25
Exp. On Gift for
Parliamentary
Consultative
Committee
0.00 0.25 0.25
Exp. On Hindi
promotion
1.50 1.75 1.75
Exp. On Tea/Coffee
etc. within office
premises
1.50 2.00 2.00
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Exp. On Tea/Coffee
outside office
premises
1.00 2.00 2.00
Expenses other than
gift for
parliamentary
Consultative
committee
10.00 NIL NIL
Expenditure
incurred by M.O
0.40 0.40 0.40
Expenses on
Training
10.50 10.50 12.00
Insurance 0.40 0.40 0.40
ISO Certification
Fees
17.60 17.60 NIL
Legal Fees 3.00 4.00 4.00
Maintenance of
Computer
4.00 6.00 6.00
Maintenance of
Vehicles
3.50 5.00 5.00
Maintenance onHoliday
Homes/Guest
Houses
6.50 5.00 4.50
Medical Fixed 7.50 7.50 7.50
Medical Others 70.00 80.00 80.00
OTA 5.00 7.00 7.00
Other Sundry
Expenses
8.88 9.00 9.00
Pay & Allowancesand Contribution
(excl. Medical &
OTA)
1000.00 1100.00 1200.00
Photostat Charges 1.00 1.00 1.00
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Postage 3.00 3.00 3.00
PR & Publicity 0.05 0.50 0.50
Printing &
Stationary
10.00 12.00 12.00
Reimbursement Of
Traveling Exp. Etc.
to retired employees
0.00 2.00 2.00
Reimbursement of
Local Conveyance
0.50 0.50 0.50
Remuneration for
hiring services for
contingent jobs
0.00 3.00 3.00
Rent 12.50 11.50 10.00Repair
& Maintenance
18.00 25.00 25.00
Sundry articles for
office use
4.00 5.00 5.00
Taxes 3.00 3.00 3.00
Taxi Hiring
Charges
0.50 1.00 1.00
Telegram & Telex 0.00 NIL NIL
Telephone (inclFax/Mobile)#
11.00 12.00 12.00
Transport Charges
for Sundry Articles
0.10 0.10 0.10
Traveling Expenses 30.00 45.00 45.00
Water Charges 1.00 2.00 2.00
Welfare 18.00 20.00 20.00
Group Minor Capital Assets
Duplicators (incl.
Photocopiers)
2.00 2.00 2.50
Franking Machines 1.00 1.00 0.25
61
8/7/2019 Narayanan r Main Prj
62/63
Furniture &
Fittings(incl. Fans)
6.00 6.00 6.00
Intercom
Equipments
0.75 1.00 1.00
Other Equipments 8.00 8.00 8.00
Typewriter 0.20 0.20 0.00
62
8/7/2019 Narayanan r Main Prj
63/63
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