A budget is a statement containing a forecast of revenues and expenditures for aperiod of time, usually a year. It is a comprehensive plan of action designed toachieve the policy objectives set by the government for the coming year. A budget isa plan and a budget document is a reflection of what the government expects to doin future. While any plan need not be a budget, a budget has to be necessarily aplan. It shows detailed &location of resources and propod taxation or othermeasures for their realisation. More specifically, a budget contains information about:

i) plans, programmes, pro~ects, chemes and activities-current as well as new sydwm-I proposals for the coming year;ii) resource position and income from different sources, including tax and non-taxrevenues;iii) actual receipts and expenditure for the previous year; andiv) economic, statistical and accounting data regarding financial and physicalperformance of the various agencies and organs of the government.
A budget is, however, not a balance sheet (exhibiting total assets and liabilities) ofthe government on a particular date but refers only to information explained above.It is a financial blueprint for action and is, therefore, of great advantage togovernment departments, legislatures and citizens.

Merits
i)
As already stated, the rationale for this type of classification was the need tofacilitate control and accountability. Inter-agency, inter-organiation and inter-department comparison of expenditure could easily be made. This informationwould also be available on a time-aeries basis, that is, from year to year, so thatthe departments conarned could be pulled up if the expenditure trends, asrevealed through this classification, were not satisfactory

ri) It shows clear allocation of funds. For example, what percentage of the expenditure is on salaries, travelling allowances, etc. and iii) In times of financial stringency, this classification enables across-the-board cutson specific heads such as travelling allowances, foreign travel etc.
I

Demerits
i)The basic philosophy of budgets with this type of classification is that spendingthe budgetary allocation is in itself a virtue. Whatever the amount allocated to a particular object it has to be spent, without emphasis on the likely outcome ofthat expenditure. Since control is not related to performance, it easily degenerates into wastefulness and extravagence. Performance thus takes a backseat. ii) Emphasis is laid on procedural considerations, legality and regularity ofexpenditure and all the complex rules that are framed to satisfy regularity audit.Evaluation, justification for expenditure and obtaining value for money become only incidental
.iii) Inadequate information is available about the government's objectives andprogrammes. The emphasis on control and accountability exerts an influence onthe criteria which govern budget decisions. Programme control, contribution todevelopment, programme co-ordination and efficient resource allocation are neglected. iv) Any duplication, redundant activities and expenditure are hard to detect andavoid
.v) It is only the most pressing demands which receive attention of the budgetmakers. Policies, programmes and projects which have only long term benefits,usually get postponed year after year.