Zero-based budgeting is useful

Even for sanctioned projects, funds would no longer be treated as sacrosanct but subjected to a fresh examination now that the expected growth rate is nowhere in sight.

ZBB is thus an integrated planning-cum-budgetary exercise with the active involvement of managers at the executive level. Significantly, by the mid-eighties, the concept had already been abandoned in the West. Little wonder then that in India little was achieved beyond a few seminars. The concept was a non-starter due to the in-built resistance of various departments.

It came as no surprise that the comprehensive questionnaire enclosed with the directive of the ministry of finance to the other ministries/departments issued in July 1986 remained largely unanswered.

But when it came to me at the Eastern Railway, I perceived it as a potential challenge, for the Railways already has its objectives spelt out in its Corporate Plan with detailed action plans for each zonal railway within the overall framework of the Corporate Plan. I initiated action to implement ZBB on a limited scale under the budgetary heads: establishment in offices, maintenance of service buildings, repair and maintenance of plants and equipment.

For this a detailed but pragmatic questionnaire was devised for each project to check if this is a statutory requirement, or does it arise out of any codal provision; whether this a safety work or one that contributes to better operations; whether the work is on replacement account specifying if modern cost effective techniques have been employed.

It had to be checked if the activity is in keeping with the objective of the corporate plan, or whether it arose out of any commitments made by the minister on the floor of the House, and so on. The level of manpower requirement for the new activity had to be screened along with linkage of investment in allied activities during the preceding five years.

The Railways is the best suited for implementation of ZBB — with suitable zodifications — not merely because its finances are at an all-time low but because of the inherent strength of the organisation, which already has well laid down procedures for identification of projects after detailed scrutiny.

Today, with ready access to electronic data, software packages can be designed to facilitate decision-making. It therefore makes sense to give ZBB a chance, despite the prophets of gloom.

The problem faced by this organisation is overstaffing at all levels and decreased productivity. Chairman IIMS Rana is on record for proudly claiming that manpower has been reduced from 1.65 million in 1990-91 to 1.54 million in 2001-02. This amounts to a mere 9 per cent in 11 years — or just 0.83 per cent annually!

The ministry has under its control perhaps the largest number of officers at the joint secretary level with work that keeps overlapping. The chairman does not have any major functional charge; even the finance secretary holds the key economic affairs portfolio.

Yet, the chairman is assisted by a staff officer, euphemistically designated as ‘executive director corporate planning’, with hardly any work pertaining to planning with him.

At the same time, any blind application of the tenets of ZBB without regard to Indian conditions could be self-defeating. The zeal for undertaking the exercise has to be duly tempered with a pragmatic appreciation of ground realities. ZBB should not be oversold, nor expectations be raised too high.

Instead, a variable pace for different areas should be adopted by fitting it into the structure and culture of each organisation. Basically, the concept is aimed at minimising paper work.