Consider the following statements in regard to Zero Base Budgeting (ZBB) :

(1) Existing Government programmes can be discarded under ZBB if they are found to be outdated.

(2) ZBB is difficult to be applied to Human Development programmes as the outcome of such programme is intangible in nature.

(3) ZBB is used by Communist countries only.

Which of the statements given above is/are correct?

Solution

Zero-based budgeting is an approach to planning and decision making which reverses the working process of traditional budgeting. In zero-based budgeting, every line item of the budget must be approved, rather than only changes. During the review process, no reference is made to the previous level of expenditure. Regarding zero Base Budgeting (ZBB) existing government programme can be discarded under ZBB if they are found to be outdated. Moreover ZBB is difficult to be applied to Human Development programmes as the outcome of such programmes is intangible in nature.