narayanan r main prj

8/7/2019 Narayanan r Main Prj

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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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http://fciweb.nic.in/finanancial/integrated_information_system.htmhttp://fciweb.nic.in/finanancial/integrated_information_system.htmhttp://fciweb.nic.in/finanancial/integrated_information_system.htmhttp://fciweb.nic.in/finanancial/integrated_information_system.htm


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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%.


YEAR 2006-2007

SI.NO Particulars Difference inamount. (Rs.

in lakhs)

(2006-07)

Percentagechange Increase/Decrease


2. Audit fees 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


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


NIL

45. Intercom

equipments

.25 33 Increase


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.


YEAR 2007-2008

SI.NO Particulars Difference in

amount(Rs. in

lakhs)

(2007-08)

Percentage

change

Increase/Decrease


2. Audit fees .5 50 Increase


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


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


NIL

47. Intercom

equipments

.25 33 Increase


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.


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


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.


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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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


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 Processing &

Communication

2.00 2.00 2.00

Electricity 19.00 21.00 22.00


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



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


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.


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



Welfare 20.00 20.00 18.00


Duplicators (incl.

Photocopiers)

2.00 2.00 2.00


Furniture &


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




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


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 Processing &

Communication

2.00 2.00 2.00

Electricity 22.00 22.00 22.00


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



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


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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.


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



Welfare 18.00 20.00 20.00


Duplicators (incl.

Photocopiers)

2.00 2.00 2.50


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Furniture &


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

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narayanan r main prj

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