Types of Budgets
Budgets can be categorised into different types depending on purpose, scope, and preparation method. Each type has its own significance in financial management and library operations.- Operating Budget: The operating budget deals with the day-to-day financial needs of an organisation. It includes recurring items such as staff salaries, purchase of books, journal subscriptions, utilities, and maintenance charges. For example, a university library prepares its operating budget annually to cover wages of employees, subscriptions for online databases, and electricity bills required for smooth functioning.
- Capital Budget: A capital budget focuses on long-term investments and infrastructural development. It is meant for durable assets like buildings, renovation projects, ICT infrastructure, automation systems, and furniture. For instance, when a state library allocates funds to construct a new digital reading hall with modern equipment and furniture, it is considered a capital budget.
- Programme Budget: A programme budget is prepared for specific activities or services instead of departments. It links financial allocation with outcomes and services to be delivered. For example, if a public library organises a literacy campaign, a separate budget is made for training volunteers, printing reading materials, and publicity expenses under programme budgeting.
- Performance Budget: A performance budget emphasises the relationship between the money spent and the results achieved. It uses measurable outputs and performance indicators. For instance, a library may show in its performance budget that an allocation of ₹5 lakh for e-resources resulted in 2,000 downloads by users in one year.
- Zero-Based Budget (ZBB): Zero-based budgeting requires every expenditure to be justified afresh for each budget cycle, rather than simply continuing past allocations. This approach helps to avoid wasteful spending. For example, instead of automatically renewing old journal subscriptions, a library adopting ZBB would re-evaluate which titles are most useful for users each year before making fresh purchases.
- Line-Item Budget: A line-item budget lists expenditures under specific heads or categories. It is simple to prepare but less flexible. For example, a district library may present its budget in terms of separate items such as ₹2,00,000 for books, ₹50,000 for journals, ₹10,00,000 for staff salaries, and ₹1,50,000 for furniture.
- Incremental Budget: Incremental budgeting is based on the previous year’s budget, with slight increases or decreases made depending on changes in requirements. Although simple, it often ignores changing priorities. For instance, if a library had a book budget of ₹2 lakh last year, it may raise it by 5 per cent to ₹2.1 lakh this year without any major revision.
- Surplus, Deficit, and Balanced Budget: Budgets may be surplus, deficit, or balanced depending on the relationship between income and expenditure. A surplus budget occurs when income is higher than expenditure, as in a library society receiving ₹10 lakh in grants but spending only ₹9 lakh. A deficit budget arises when expenditure exceeds income, such as a municipal library spending ₹15 lakh while its income is only ₹12 lakh. A balanced budget exists when income and expenditure are equal, for instance, when a college library receives ₹5 lakh and spends the same amount.
- Fixed and Flexible Budget: A fixed budget remains constant regardless of changes in demand or activity. For example, a library may fix ₹1 lakh for periodicals, whether or not new users join. On the other hand, a flexible budget can be changed according to actual activity levels. For instance, if user demand for e-resources increases, a digital library may allocate additional funds to expand server capacity and provide more resources.
- Cash Budget: A cash budget estimates cash inflows and outflows over a specific period. It ensures the library or organisation has enough liquidity to meet its short-term commitments. For example, a library may prepare a quarterly cash budget to ensure sufficient funds are available to pay annual subscription fees to publishers when they fall due.
2. Application of Planning–Programming–Budgeting System (PPBS) in Public Libraries
The Planning–Programming–Budgeting System (PPBS) is a scientific method of budgeting introduced in the 1960s, especially in the United States under President Lyndon B. Johnson, to bring rationality, efficiency, and accountability into financial management. It integrates planning, programming, and budgeting into a single decision-making framework. It is different from traditional budgeting because it focuses on the allocation of money and the objectives, outputs, and long-term impacts of expenditure.The Planning–Programming–Budgeting System (PPBS) can be effectively applied in public libraries to make financial management more purposeful and result-oriented. It moves beyond traditional budgeting by linking resources directly with goals, programs, and measurable outcomes. The application of PPBS in libraries can be explained step by step:
- Planning in Public Libraries: The first step in PPBS is planning, which involves setting the library’s long-term objectives and identifying the community's needs. In this stage, the library defines its mission: promoting literacy, ensuring equal access to information, supporting education, and preserving cultural heritage. Needs are assessed through surveys, feedback, and analysis of user trends. For example, a state central library may decide to focus on reducing digital illiteracy in rural areas or expanding services for visually impaired readers. Planning ensures that the budget is aligned with the library’s larger goals and societal role.
- Programming in Public Libraries: After establishing the goals, the next step is programming. Programming means dividing the overall plan into specific programs or projects that can be implemented and measured. These programs may include book acquisition and collection development, ICT and automation projects, community literacy campaigns, mobile library services, and staff development initiatives in public libraries. For instance, under the broad goal of digital literacy, the library can design programs such as setting up e-library kiosks in villages, organising computer literacy workshops, and providing online databases. Programming helps to translate broad objectives into actionable activities.
- Budgeting in Public Libraries: Financial resources are allocated according to priority and expected outcomes once programs are finalised. Unlike traditional line-item budgeting, PPBS connects expenditure with specific outputs and results. Instead of assigning money for “books” or “equipment,” the budget specifies the purpose and expected impact. For example, ₹20 lakh may be allocated for the digitisation of rare manuscripts with the target of making 10,000 documents available online. In contrast, ₹10 lakh may be assigned for community workshops with the objective of training 5,000 learners in digital skills. This step ensures efficient use of funds by directly linking them to library services and outcomes.
- Monitoring and Evaluation: A key feature of PPBS is its emphasis on accountability through continuous monitoring and evaluation. Public libraries compare the planned results with actual achievements and identify gaps or challenges. Performance is measured using indicators such as the number of new members, growth in circulation, usage of e-resources, attendance at literacy programs, or user satisfaction levels. For example, if ₹5 lakh was allocated for literacy workshops, the evaluation process will check how many people participated, how their skills improved, and whether the program met its objectives. This step ensures transparency and provides a basis for future decision-making.
3. Advantages of PPBS in Public Libraries
- Goal-Oriented Budgeting: PPBS links every rupee spent to a clear objective of the library. Instead of simply spending on books or salaries, it ensures funds are used to achieve goals like literacy promotion, digital access, or community development.
- Efficient Allocation of Resources: Since PPBS involves comparing different programs and selecting the most effective ones, libraries can allocate limited funds to areas that give maximum benefit to users.
- Long-Term Perspective: Traditional budgets focus only on a single financial year. PPBS encourages libraries to plan for the future, such as setting a five-year vision for digital transformation or outreach expansion.
- Performance Measurement: Expenditure is tied to measurable outputs, such as the number of workshops held, new members enrolled, or digital documents accessed. This makes it easier to assess the effectiveness of library services.
- Improved Accountability and Transparency: By showing how money translates into specific outcomes, PPBS provides accountability to government authorities, donors, and the community. This increases trust and support for the library.
- Better Decision-Making: PPBS requires the evaluation of alternative programs. For example, a library may compare the benefits of investing in e-resources versus building a new reading room, and then choose the program that benefits more users.
- Encourages Innovation: Since programs are designed around community needs and goals, libraries may develop new services such as mobile libraries, digital repositories, or literacy camps.
4. Limitations of PPBS in Public Libraries
- Complexity of Implementation: PPBS is more complicated than traditional line-item budgeting. It requires trained staff, proper data, and systematic evaluation methods which many public libraries may lack.
- Time-Consuming Process: Preparing detailed plans, designing programs, and linking them to budgets takes more time compared to simple incremental or line-item budgeting.
- Need for Skilled Personnel: Successful PPBS requires librarians and administrators with expertise in planning, data analysis, and performance evaluation. Smaller libraries often do not have such staff.
- Difficulty in Measuring Outcomes: Some library services, like cultural enrichment or user satisfaction, are difficult to quantify. This makes performance measurement less precise.
- Resistance to Change: Library staff and administrators accustomed to traditional budgeting may resist adopting PPBS due to its technical requirements and new approach.
- Data Collection Challenges: Effective PPBS depends on reliable data about usage, costs, and community needs. In many public libraries, especially rural ones, systematic data collection is weak.