Proportionate Budget allotment
BP limits ( Budgetary Proportion limits)
(Very Important Question)
Ref: Para Nos. 508 to 511 of Indian Rlys.Financial Code vol.I
Carrying out a meaningful comparison of the actual workings expenses (for the month as well as to end of month) with the Budget Allotment.
BP limits are a tool of Control over Expenditure.
To whom, the responsibility lies:
● The executives, to whom the allotment/grant has been placed. Also they are responsible for the control of expenditure against the budget allotment.
● But the Accounts officer, in his capacity as the financial adviser to the administration, to render all possible assistance to the controlling/spending authorities in exercise of Proportionate Budget allotment/fixing Budget Proportion (BP) limits.
How it done:
● Distribute the sanctioned allotment for the whole year into 12 months after taking all known factors of disturbance or special features into account.
● The following factors keep in mind before resort to distribution of Grant/Allotment over the full years.
(i) Throw forward from the previous year.
(ii) All expenditure whether in cash or by transfer, the liability for which already exists, but which is not likely to be distributed evenly during the year, whether because it is of a periodical nature (say PLB), or because it is contingent on the receipt of supplies, or for any other reason.
(iii) Expenditure which is practically fixed and evenly distributed throughout the year.
(iv) Other expenditure which is likely to be incurred during the year but liabilities for which have yet to be incurred.
(v) The need to keep some amount as a reserve for meeting fresh or unanticipated expenditure.
i) Pay - Usually the allotment/grant under PU: 01 ( Pay) distributed over the 12 months almost uniformly (from July to March - a little bit more than April to June months because grant of annual increment in July month). Also the No. of retirements and recruitments also bear in mind before distributing such allotment.
ii) PLB - Entire grant is distributed in September month ( for Dussehra festival). It is better to leave some grant in the rest of months after September for arranging late payments of PLB)
iii) Contractual payments : Depend on the execution of actual works
Certain heads say Establishment expenses such as Salaries:
Past actuals as worked out for a number of years may form the basis for fixing BP limits for current year. Because such expenditure does not fluctuate from month to month.
How purpose is fulfilled:
As above, the BP limits for each month worked out for each Sub Head of Grant and the progress of expenditure under each sub-head is then watched from month to month through MFRs - Monthly Financial Reviews and other Budgetary Reviews (RE/BE & FME) in order to see that the expenditure is according to the BP limits and not at a pace which is likely to lead an excess at the end of year.