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About the Author

Dr. K.L.Handa is Professor of Financial Management in the Indian Institute of Public Administration, New Delhi. He holds three Master's Degrees in Political Science, Economics, and Social Science. His Master and Ph.D. in Social Science are inter-disciplinary degrees with Public Administration as the major area, which he obtained from Syracuse University, New York, U.S.A. 

Dr. Handa possesses a long experience of more than three decades of conducting research, teaching, preparing case studies, and directing training programmes for senior and middle level officers of Government, Public Sector Undertakings and Autonomous Bodies, on various aspects of financial management. He has already to his credit four books, and more than 30 articles published in leading assignments for a number of organizations including Government of Gujarat, Indian Council of Agricultural Research, Ahmedabad Municipal Corporation, Nahan Foundries, Bihar State Industrial Development Corporation, Shimla Municipal Corporation, Indian Railways.

Dr. Handa has been a member of number of high powered committees of Government and non-government Bodies. Also, he is invited as guest faculty by a large number of Organizations, Academies, and Institutes of over India.




Chapter 1: Introduction

Importance of finance function. Financial stringency and resource crunch. Increasing public debt and mounting interest liabilities. Increasing revenue deficit. Limitation of deficit financing. The need for an effective control over-expenditure. Centralised expenditure control. Schemes for delegation of financial powers.Management orientation.

Chapter 2: The Historical Perspective

Line-item budget, Developments towards introduction of performance budgeting. Recommendations of the Administrative Reforms Commission. Concept of performance budgeting. Accounting classification. Performance budgeting as an important component of Zero Base Budgeting. Budget allocation decisions.

Chapter 3: ZBB - Conceptual Framework

Incremental budgeting. Importance of budget in an organization. Different types of budget. Concept of Zero Base Budgeting. Important approaches implicit in the application of ZBB. A case study to illustrate the concept of ZBB.

Chapter 4: Recent Developments

Developments abroad. Developments in India. Application of ZBB in the Department of Science and Technology. Seventh Five-Year Plan and ZBB. Introduction of ZBB in the Government of India. Subsequent developments. Review by the Committee of Secretaries. ZBB and the Budget Circular of Government of India.

Chapter 5: Zero Base Budgeting - Mehtodology

Identification of Decision Units. Formulation and development of Decision Packages. Mutually exclusive Decision Packages. Importance of evaluative techniques. Different levels of funding. Ranking of Decision Packages. Preparation of budget. Application of ZBB to Research and Development. Application of ZBB to Industry.

Chapter 6: Evaluative Techniques

ZBB and evaluative techniques of analysis. Discounted Cash Flow Technique. Discount Factors. Capital Recovery Factor. Advantages of discounted cash flow technique. Investment appraisal. Accounting Rate of Return. Pay-back Period Method. Time value of money and project appraisal. 

Chapter 7: Cost-Benefit and Cost-Effectiveness Analyses

Cost-Benefit analysis. Net Present Value. Benefit/Cost Ratio. Opportunity Cost of Money. Internal Rate of Return. Social Cost- Benefit analysis. The problem of measurement. Shadow Prices. Social Weights. Sensitivity Analysis. Risk and Uncertainty Analysis. Cost-Effectiveness Analysis. Expenditure Finance Committee and Public Investment Board. ZBB and project analysis.

Chapter 8: Performance Norms 

Periodical analysis and review. Norms of performance. Productivity ratio. Post-productivity test. Performance ratio. Unit cost. Work measurement ratio. Work-load factors. Related staffing patterns. Manning the table. Quantitative measurement of output. Homogeneous categories of output units. The traditional approach.Scientific and realistic norms of performance. Final and Intermediate outputs. Controllable and Non-Controllable factors. ZBB and performance norms. Monitoring and review of performance.

Chapter 9: Problems and Issues in the Implementation of ZBB

Trained Personnel. Reliable data. Information technology. Need for training courses. Full support from the top level downward. Re-deployment of resources. Re-deployment of manpower. Plan and non-Plan expenditure. Paper work. Zero Base Review. Decision Units and internal motivation. Constitutional provisions and the budgetary process. Pre-budget scrutiny by the Ministry of Finance. Administrative Culture, structural reforms and procedural changes.

Chapter 10: Concluding Remarks

ZBB - alogical and rational approach. Importance of understanding the concept. Flexible approach. Human factor. Political Will. Preparatory work. Sound Information System. Norms of Performance to regulate expenditure. Control over expenditure.

Appendix I
Appendix II
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