BUDGET

LEARNING GOALS
After reading this Section, you will be conversant with:

Capital Budget

Revenue Budget

Cash Budget

Zero Base Budget

Expenditure Control

Budget Process Re-engineering

Introduction
Budget is a best tool in the hands of management to overview:

Funds Management

Projects undertaken in the business, its expenditure and its further requirement

Exercising expenditure control

Assessing financial capability of the organisation

To modify / Augment the business planning

Budget in BSNL
The budget in BSNL is compiled under three categories:

Revenue Budget

Capital Budget

Cash Budget

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The following tabulation will indicate the composition of different Budgets in BSNL.
BUDGET

Revenue
(Operating Expenditure)

Capital
(Capital Expenditure)

Requirement of Monthly
Cash
funds
Flow Statement
For Operation
Collection
Account for
Accounts
every 15 days

Salary

Land

Medical Expenses

Building

Wages

Apparatus and Plants

Overtime Allowance

Electrical Installations

LTC

Lines & Wires

Pension/Leave Salary

Cables

Subscriber Installation

Contribution

Cash

Maintenance
Expenditure
Business Promotion
and Marketing
Budget Heads
Old head of accounts:
Capital Works :

Operating Expenses:

Schedule 105 to1 07

Fixed Assets

Schedule 114 to 116

Works in Progress

Schedule 150 to 166

Remuneration

Schedule 171 to 185, 192

Office & Administration

Schedule 189 to 191

Depreciation

Schedule 195

Interest

New head of Accounts (Using in ERP )

Capital Works :

Schedule 211
Schedule 219

Fixed Assets
Works in Progress

Operating Expenses:

Schedule 501
Schedule 502
Schedule 505
Schedule 504

Remuneration
Office & Administration
Depreciation
Interest

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Capital Works Programme

The capital works programme containing proposals for budgeting of the capital
works to be submitted to Corporate Office, during February in the forms 'A','B' and
'C'.
Capital Works Programme (February)

A
Existing Proposals of
Projects costing Rs.5 Cr and
above but less than Rs 20 Cr
(Within the powers of Heads
of Circle)

B
New proposals of projects
costing Rs 5 Cr and above
but less than Rs 20 Cr
(Within the powers of
Heads of Circle)

C
Existing /New Proposals of
Capital Works in progress
costing more than Rs.20 Cr
(Beyond the powers of Heads
of Circle)

The capital works programme should be thoroughly scrutinized before submission to the
corporate Office by the planning branch and the IFA of the circle office.

Capital Budget
Capital Expenditure in BSNL primarily relates to Acquisition of Land, Constructing Telephone
Exchanges, Procurement of equipments, Line and Wires, Laying of cable etc.
Formulation of RE/BE
Points to be kept in view while formulating Budget-Estimates are:

The necessity for individual projects, newly proposed as well as works in-progress
should be fully examined from the point of view of the relevance of the project to the
expansion or improvement of the network, the essentiality of the specific project and
its profitability.

The works-in-progress may turn out to be not relevant and therefore not justifying
further expenditure for the following reasons.
(i)

Prolonged gestation of the projects concerned.

(ii) Recent developments like policy decisions regarding changing technology, such
as digitalization, change in Product-mix from factories, like phasing out of
electro-mechanical system etc.

Decision should be taken in such cases regarding abandoning of the project, taking
care to find ways and means of salvaging the investment already made.

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In case of projects which have been included in the Demand-for-grants after the above
scrutiny, the listing may be done on the basis of priority, so that the directorate could
decide about any possible deletion in the context of inadequacy of allotment of funds.

In the case of works costing less than Rs.5 Cr each, where a lump sum allotment is
asked for, a similar exercise, as mentioned above should be under taken so that only
essential and remunerative projects are included in the programme.

The above mentioned exercises should be conducted by both the planning and budget
branches jointly.

RE/BE Statements in respect of Capital works is to be submitted to Corporate Office, BSNL in

forms 'A' to 'H' during September.

C
A
P
I
T
A
L

Proposals in respect of projects costing 5 Crores & above

AA

W
O
R
K
S
B
U
D
G
E
T
S
T
A
T
E
M
E
N
T
S

Consolidated component wise demand of ongoing projects

Component-wise consolidated demand - major works costing below 5 Cr

Works costing below Rs 5 Cr. But expenditure exceeded Rs 5 Cr.

Consolidated proposals of sanctioned works (A to D)

Material input-wise requirement for capital works

Profitability of capital works projects to assess expenditure on nonremunerative projects for the purpose of "USO" (Universal Social
Obligation) Funding.

Provision of targeted VPTs - technology wise break up with cost /line

Allotment of funds for Capital works expenditure:

The funds for Capital works expenditure comprise

(i)

Specific provision for each project costing Rs.5 Cr and above.

(ii) Lump sum provision for all other works.

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This distinction made in the budget determines the method by which allotments are
placed at the disposal of the various authorities for execution of works.

Funds for major works, costing Rs.5 crores & above are allotted by the Corporate
Office to Heads of Circles according to the components of each project.

In respect of all other works, allotments are made account head-wise in lump.

Allotments of funds are made, subject to the following conditions:a)

That no appropriation of funds is to be made against any unsanctioned detailed

estimate.

b)

That no appropriation of funds is made beyond 10% of the sanctioned cost of a

detailed estimate, and

c)

That no appropriation of funds is made which has the effect of exceeding the
sanctioned cost of the project beyond 10%

Expenditure Control
The Corporate office is ultimately responsible for controlling the whole expenditure
against the sanctioned grant and in turn Heads of Circles are required to cooperate in the
exercise of this control. Control in relation to budget allotments:

EXPENDITURE CONTROL

Review monthly
statement of
expenditure

(i)

Review of
Register of
allotments and
expenditure

Review of Works
Register

Review of Estimates,
FST (Final Stock
Taking) Reports,
periodical review
statements

That expenditure should not be incurred under any head in excess of the funds
allotted.

(ii) That if any time it becomes apparent that there is likely to be a surplus under any
head, then the amount of the probable excess must be promptly surrendered.
These two objects can be attained only by the adoption of a systematic watch over
expenditure and by a monthly comparison with grants. For the purpose of control every
administrative officer should insist on the submission by each of his subordinate officers
amongst whom he subdivides his allotment of a regular monthly basis. The same can be
watched through the registers and various statements prescribed.
Non budgeted Works (Project costing 5 Crores & above)
Works not provided for in the sanctioned budget are termed as Non-Budgeted works.
No expenditure can be incurred on Non Budgeted works with out the prior approval of the
competent authority. In case of urgency, it can be had with the approval of the competent
authority.
Demands for funds for execution of projects beyond sanctioned cost

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In some cases funds are demanded in BE/RE/FG (Budget Estimate/ Revised Estimate/
Final Grant) for individual projects beyond the sanctioned cost, stating that the revised project
estimates are under preparation. Orders of the BSNL are clear that funds cannot be allotted
beyond the sanctioned cost. Since the projects should not be starved of funds during advanced
stages of execution, it has been decided that as soon as the expenditure on a project reaches the
level of 75% of the sanctioned cost, a review should be under taken to examine if the project
can be completed within the sanctioned cost. If it is anticipated that the cost is likely to go
beyond 10% of the sanctioned estimate, immediate action should be taken to prepare a revised
project estimate and have it sanctioned well in advance.
Revenue Budget
The Revenue receipts and Working Expenses are forecasted and worked out and
RE/BE statements are compiled in Annexure-A, B and C.
Annexure-A (Working Expenses):
The Estimation is projected in Part-A and Part-B distinctly for Employment
(Remuneration) and expenditure on Office and Administration respectively. The actual
expenditure for last three years is taken for comparison. The actual for the first five months of
current financial year and estimation for remaining seven months are worked out. The
estimation for BE is also worked out and projected. While furnishing requirements of funds
care is taken to provide pension and leave salary contribution of employees. Instructions are
issued by BSNL HQ from time to time for compiling the RE/BE statements keeping in view of
economy measures and control of expenditure.
Annexure-B (Revenue Receipts)
The Estimation of revenue is worked out on the basis of number of telephone lines,
WLL lines and CMTS by applying average revenue for such lines. A target of additional lines
for the current year and also the expansion programme for ensuing year are taken into account
for estimation of revenue receipts.
Annexure-C (Establishment Expenditure)
The Establishment expenditure on salary is estimated in relation to the actual /
estimated number of posts. Proposals for creation of new posts are also taken into account for
estimation of salary expenditure.
New Items of Expenditure
No provision for new items of expenditure may be included in the budget without the
prior approval of competent authority. All proposals for new expenditure will be submitted for
the approval of the competent authority. All proposals for new services, expansions to existing
services expenditure and proposals for additional expenditure likely to involve excess over
grants necessitating an application for a supplementary grant should be placed in the statement.
No expenditure should be incurred without the approval of the competent authority.
It is most important that proposal involving new expenditure that it is desired to
introduce during any particular year, should be submitted in ample time before the prescribed
date to admit of their being fully considered and approved and taken into account for purposes
of the preliminary schedule of demands relating to that year. In preparing this statement of new
items of expenditure should be made in respect of increase which is of a permanent nature and
those which are seasonal or temporary.
These
should
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6 of
14 be grouped separately.

Cash Budget
The Cash requirement of each SSA and Circle HQ are forecasted once in 15 days
against Capital and Working Expenditure with reference to proportionate Budget Allotment.
Funds are released by Corporate Office after scrutiny of requirement through banking channel.
This arrangement gives effective control on spending units for regulating the
expenditure within budget allotment.
Monthly cash flow statement of Collection Accounts is prepared & sent by SSA to
Circle Office. Circle Cash flow statement of Collection Accounts is prepared by Circle & sent
to Corporate Office. It will ensure smooth flow of funds from SSA/PAU/Circle to Corporate
Office.
Zero- Based Budget:
In zero-based budgeting, every line item of the budget must be approved, rather
than only changes.[1] Zero-based budgeting requires that the budget request be reevaluated thoroughly, starting from the zero-base; this involves preparation of a fresh
budget every year without reference to the past. This process is independent of whether
the total budget or specific line items are increasing or decreasing.

Budget Process Re-engineering

As approved by BSNL Management Committee in its 105th meeting held on 11-11-2008, the
budget processing and related works have been modified in order to streamline the Budget
processes and to yield more realistic budgetary estimates in the circles and corporate office as
detailed below:1. Capital Budget:(a)Allotment of funds under Capital works:BBF Division shall arrange allotment of funds to the circles under Capital outlay servicewise/component-wise
in
lump-sum
for
all Projects
irrespective
of area
(General/Rural/Tribal/VAS), but on the basis of assessment/recommendation of Planning
branches of Corporate Office viz. LTP, Switching, core Network, Cellular Mobile, Building
works, Broad Band etc within the approved Plan of the year. Circles will, in turn, allot funds to
their SSAs accordingly in order to achieve the physical targets already fixed under various
parameters. Circles shall forward a consolidated statement of allotment showing account codewise distribution of funds as allotted by corporate office. Submission of RE/BE proposals
under Capital outlay from Circles/Units to corporate Office is dispensed with.
(b) Compilation of Capital works Programme:Capital works programme shall be compiled only for works costing Rs.20 crores and above
instead of Rs.5 crores and above. The details are to be submitted to BBF Division of Corporate
office by the respective circles very year in the prescribed format (enclosed) to enable

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corporate office to monitor the progress of ongoing and New projects costing more than Rs.20
crores.
(c ) Budgetary control:BBF Division will furnish details of expenditure (as obtained from Corporate Accounts
Branch) to the concerned Circles and respective Planning branches of Corporate office, on
quarterly basis for monitoring physical targets viz-a-viz capital expenditure recommended by
planning branches. This pro-active measure will ensure quarterly review of reasons for
budgetary variance and a periodical and centralized budgetary control. The circles need not
send variation statements at the close of the financial year to corporate office. The variation
statements will have to be reviewed by the respective circle.
Procedure for obtaining statements of physical achievements/progress/review will continue to
be dealt in Planning Branches as hitherto followed.
2. Revenue Budget:(a)New Items of Expenditure proposals from circles for fixing ceiling on New posts and
expenditure therefore is dispensed with immediate effect.
(b)Expenditure statement of Loans & Advances:-Obtaining of expenditure statements of Loans
& Advances, including HBA, is dispensed with immediate effect.
The existing procedure and related works on budget processing under capital outlay/working
expenses stand modified to the extent noted above with immediate effect
Copy to:1.PGMs(F)/GMs(F)/DGMs(F&A)/IFA of circles for information & follow up action. They are
requested to forward a consolidated statement showing account code-wise distribution of funds
made at circle level to BBF Division of Corporate Office after receipt of RE BE.
2. PGMs/GMs of Planning Branches of BSNL corporate office for information. They are
requested to furnish circle-wise details financial assessment/recommendation under various
parameters along with physical target assigned for achievement to BBF division for allotment
of funds to circles in lump sum for all works under various services and components under REBE
Proforma for capital works programme for the projects costing Rs.20 crore and above
(in thousand of rupee)
Sl. No.

BSNL
No.

Full
Acparticulars code
of
the
project

Sanctioned Estimated Expenditure remarks

particulars cost
incurred up
of project
to
31st
March

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2
3
And so
on
Signature of IFA

Signature of Head of circle

Page 9 of 14

(BSNL HQ No.9-1/2008-CB

dt. 4-12-2008)

Sub:- Budget process-Re-engineering-reg

Ref:-1.Corporate office letter no.9-1/2008-CB dated 4-12-2008
2.Corp. Office letter no.8-1/2009-CB dated 5-6-09 & even no. dated 6-7-2009
As per guidelines/procedure contained in para 1(a) of corporate office letter under
reference (1), Service-wise/component-wise allotment of funds under BE 2009-10 have been
made in lump sum to the Circles vide letters under reference (2) for all the projects based on
the projection of requirement of funds for various activities by the respective Planning
Branches of BSNL Corporate office. Though the Circles were requested therein to forward a
consolidated statement showing account code-wise distribution of funds made by them to the
SSAs etc. latest by 30-6-2009, the details for the same are still awaited. This may be expedited.
Requests for additional allotment of fund, over and above the BE allotment already
made, are now being received from some circles. Since the entire allotment as per approved
Plan Outlay under BE 2009-10 has already been distributed to the Circles, no further allotment
can be considered by B&FC Division at this stage. Any request for additional requirement of
fund/surrender of allotment made under BE 09-10 or Diversion of fund from one
service/component to another may be taken up well in time with the concerned Planning wings
of Corporate office for their specific approval/recommendation and inclusion in RE 2009-10
While this letter disposes of all the requests made by the Circles for additional
allotment/surrender of fund etc. over and above the BE 2009-10 allotment, the CGMs/IFAs are
requested to take suitable necessary action in this regard with the respective Planning Branches
in BSNL CO and ensure that the guidelines issued by Corporate office regarding budget
process and allied matters are adhered to strictly as it would not be possible for B&FC Branch
to allot any further fund unless the same is included in the approved plan.
(BSNL HQ No.8-1/2008-CB/(Pt)

dt. 20-7-2009)

Page 10 of 14

BHARAT SANCHAR NIGAM LIMITED

(A Govt. of India Enterprise)

CORPORATE OFFICE
B,FC&I DIVISIO N
5TH FLOOR, BHARAT SANCHAR BHAWAN, JANPATH, N EW DELHI -1 1 0 00 1.

To
ALL PGM (F) /Sr.GM (F) I GM (F)/IFAs
BSNL circles
No. 16-4/2014-CB

Dated:

07 -04-2015.

Sub:- Modification of existing procedure for Opex budget allotment &

Authorisation of Periodical cash release.
Formats for budget allotment to circles and fund requisition from circles
under Opex are being revised to incorporate the accounts heads and description
of expenditure items. Budget allotment in the new format for 2015-16 is likely to
be communicated shortly.
Periodical cash fund will be released on the basis of prorata budget for
each circle for all budgeted items including Salary, Wages, Water & Electricity
and Commission/Revenue shares etc. Periodical cash fund for special budget items
i.e. Stores & Business promotion & Marketing will be released on the basis of
annual budget. Hence the requisitions should also be made accordingly.

While compiling the periodical fund requisitions in the past, it is

observed that funds are sought for many items beyond the prorata entitlement of
budget and also without considering the actual date of payment. It is also observed
that funds are sought in 1st. spell of the month for which payment is due in 2nd.
spell of the month and vice-versa. Hence the instructions given below are issued
for strict observance while placing the funds requisitions:1. Circles should make requisition within prorata budget provisions and

also should review the budget provisions with cash funds from time to
time and should send requisition in prescribed performa with cogent
reasons if additional budget provision is required against any items.
2. If in any spell, there is any special requirement in excess to prorata budget

adjustable in future spell of funds requirements, the facts should be clearly

mentioned.
3. Circles should make requisition only for the fortnight (1st or 2nd) in
which the actual payment is to be made.
4. Advance payment due to implementation of ERP:- All these cases should be
received in BFC&I branch through ERP-FICO branch of CO BSNL with
recommendation.

Page 11 of 14

5. All remarks/justification must be mentioned on requisition proforma

itself and there is no need of separate covering letter for requisition.

6. Intimation of Fund authorization and actual cash remittance to each circle
is being sent through E-Mail (BSNL Domain only) to each circle on daily
basis. Circles are requested to check E-Mail on daily basis.
7. Since consolidated funds authorization for number of items including
statutory items are being issued by this office and actual cash is being
released in installments on actual collection basis, circles should ensure
the utilization of available cash on priority of disbursement.
8. GPF withdrawal/advances are being paid to employees by BSNL and the
same payment is to be recovered from DOT. Circle's IFA's are requested to
ensure at their own level that all such amount has been recovered from DOT
timely.
9. Payment of any sudden nature, for which cash authorization has not been
made by this office and which invites Penal Interest in case of delay, can
be met by the IFAs from the available cash in consultation with GM
(BFC&I). Cash for such items will be authorized subsequently when
requirement with full justification is received by this office.
10. Circles are aware that the cash collection is insufficient to meet the
periodical requisitions and many a times fund is arranged through
high cost external borrowings. As such all the circles should ensure
that funds should requisitioned for the actual requirement and there
should not be any case of cash remaining idle in the operational account.
11. Circles/units are requested to ensure strictly that periodical cash
authorization will be on the basis of prorata budget allotment and
expenditure incurred should be reflected in monthly trial balance correctly.
12. Requisition for time bound payment if any must be specifically
mentioned with due date at foot note-1.
13. The instructions issued vide this office letter no. 15-1/2014-CB (Part)
dated 22-08-2014 and vide letter no. 16-54/2010-B dated 10-01-2011
regarding furnishing of detailed list of "AMC payment" & details
of bills passed for Business Promotion & Marketing respectively,
should be stric tly followed.
14. Instruction regarding periodical requirement under Capex & Advance
payment Works (Corporate office level only) are being issued separately.
Encl: As above.
(Rajeev Singh)
General Manager
Budget, Financial Control & Investment
Copy to: GM(CA), BSNL Corporate Office, New Delhi.

12
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Opex Funds Requisition for the period from

Phone/Mobile No :GM(F)/DGM(F)/IFA
CAO/AO:
SI. No. Schedule Item No
Working Expenses

To

Name of Circle:(Rs. In thousand)

Requirement for
current period

XP

XP

3
4

XP
XP

1 Pay bill recoveries- Payable to DOT(GPF, HBA etc.)

5
6
7

XP
XP
XP

3 Pension Contribution
4 Leave Salary Contribution
5 Leave Salary Encashment

XP

6 Employer's contribution towards EPF

9
10
11

XP
XP
XP

7 Staff Welfare
8 Gratuity
11 &15 Medical Expenses
14 Leave Salary Encashment while availing LTC

12
13

XP

1 Salaries- Net take home pay

Pay bill recoveries- TDS,Prof Tax, Society, GSLIS,PLI, Bank
1 etc.

2 Incentive/Bonus

14

XQ
XQ

1 Rent of Buildings
2 Rates & Taxes

15
16

XQ
XQ

3 Water, Electricity and Fuel Charges

4 Insurance

17
18
19

XQ
XQ
XQ

20
21

XQ
XQ
XQ

22
23
24
25
26
27
28

XQ
XQ
XQ
XQ
XQ

5,6,7,8,12
&13 Repairs & Maintenance
14 Expenditure on Services taken from Professional
16 Printing & Stationery
17 Lease Charges
18 Commission
20 Advertisement (other than marketing)
22 Travel expenses
23 Postal Expenses
24 Police Escort Charges/ Security Guards
25 Vehicle running expenses
27 General Expenses
31 Computer Stationery & Hire Charges

29
30

XQ
XQ
XQ

31
32

XQ
XQ

33

XQ

42 Expenditure on Telecom facilities

34
35

XQ
XQ

47 Exp. on Passive infrastructure hired

51 License Fee

36
37

XQ
XQ

52 Spectrum Charges
54 L.Fee,Royality & Spectrum Charges other than AGR

35 Business Promotion and marketing Expenses

36 Expenditure on l.U.C
37 Expenditure on Services
41 Expenditure on Admn.& Operation of USO Tower

38

XR

39
40
41
42

6 Interest others
7 Interest on secured loan from bank
Stores for Factories
Non-Budgeted GPF Advance/Withdrawal

43

Non-Budgeted Refund of EMO/SD/TR

44
45

Non-Budgeted TDS- Other than salaries & Capex Payments

46

Non-Budgeted Service Tax

Non-Budgeted Other Taxes(Please specify)

47
48
49

4 Interest on Deferred Payments

XR
XR

Non-Budgeted TDS- C1xpex

Pn yj mevcts

Non-Budgeted Others (Please Specify)

Total WKG. Requirements

13
Page 13 of 14

Note:-1. Details of Time bound payment, if any, with due date:2. Certified that above requirement of funds is within the Budgetary allotment for the year 2015 -2016
3. Certified that the Fund received from
to
has been fully utilized for the
purpose stated in the requisition.
Ends No.

Dated:
Signature of IFA
Full Name of IFA:-

14
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