Zero-based budgeting to improve efficiency

Railway Minister Suresh Prabhu on Thursday said the railways will undertake zero-based budgeting to finances in the ensuing year to improve efficiency and bring it in line with international best practices.

Zero-based budgeting involves preparing budgets which every year must start from scratch with no pre-authorised funds. Zero-based budgeting requires each activity to be justified on the basis of cost-benefit analysis, assumes that no present commitment exists, and that there is no balance to be carried forward. It also provides a systematic basis for resource allocation.

To improve efficiency, Prabhu also promised that railways will take up seven types of activities in a mission mode. These include improving infrastructure quality in railways  for revenue enhancement and zero accident.

Zero-based budgeting is one of the three pillars of strategy to introduce new thought process in railways, Prabhu said. The other two are new revenues and new structures.