Q. Consider the following features of a budgeting system:
1. Requires every program to be justified from scratch periodically
2. Ignores previous year’s budget allocations while preparing the budget
3. Encourages re-evaluation and termination of obsolete programs
Which of the above features are associated with Zero-Base Budgeting (ZBB)?
Answer: D
Notes:
Explanation:
- In ZBB, each program must be re-justified during every budgeting cycle—nothing is assumed to continue automatically.
- ZBB does not carry forward past budgets. It starts from zero and allocates funds only after fresh evaluation.
- One of the main purposes of ZBB is to identify unnecessary or ineffective programs and eliminate or reduce funding for them.
Source- TMH Indian Economy by Ramesh Singh
