Chapter: 1 INTRODUCTION A budget communicates a unit's values and priorities.

Therefore, resource use should be aligned with a unit's strategic plan. The budget is the numerical representation of an action plan for a specified time period. The foundation of a budget consists of estimates of the resources needed to deliver services and the costs of those resources. Its simply an organized way of managing our finances. A budget can be as simple or as complicated as you wish. Basically, it gives you an overall picture of where your money is coming from, when its coming in and how its being spent. Above all, a budget should be flexible, and always changing according to your situation. We all work hard for our money, so its natural we want to get the most from it. Budgeting helps us afford our short-term goals like buying clothes, going to the movies, or taking a friend to that trendy new restaurant. Its also for longer-term financial goals like buying a home, a car, paying for an education, a wedding, or a holiday. When you take control of your financial affairs, youre more confident about the future.

1.1 Define Budget A budget (from old French bougette, purse) is a list of all planned expenses and revenues. It is a plan for saving and spending. A budget is an important concept in microeconomics, which uses a budget line to illustrate the tradeoffs between two or more goods. In other terms, a budget is an organizational plan stated in monetary terms. In summary, the purpose of budgeting is to:
1.

Provide a forecast of revenues and expenditures, that is, construct a model of how our business might perform financially if certain strategies, events and plans are carried out.

2. Enable the actual financial operation of the business to be measured against the forecast.

1.2 Classification of Budget

Budget classification is one of the fundamental building blocks of a sound budget management system, as it determines the manner, in which the budget is recorded, presented and reported, and as such has a direct impact on the transparency and coherence of the budget. In countries where the budget nomenclature is weak, upgrading the budget classification system should itself be considered a basic stepindeed a preconditionbefore management (PFM) embarking such as on other reforms a of public financial financial introducing computerized

management information system, a medium-term expenditure framework (MTEF), or a results-based budgeting system. A budget classification system provides a normative framework for both policy decisions making and accountability. Classifying expenditures and revenues correctly is important for (1) policy formulation and performance analysis; (2) allocating resources efficiently among sectors; (3) ensuring compliance with the budgetary resources approved by the legislature; and (4) day-to-day administration of the budget. Once established on a sound basis, a classification scheme should not be substantially changed unless there are strong reasons; a stable classification facilitates both the analysis of trends in fiscal policy over time and intercountry comparisons. Budget Types

Sales budget: The sales budget is an estimate of future sales, often broken down into both units and dollars. It is used to create company sales goals. Production budget: Product oriented companies create a production budget which estimates the number of units that must be manufactured to meet the sales goals. The production budget also estimates the various costs involved with manufacturing those units, including labor and material. Cash Flow/Cash budget: The cash flow budget is a prediction of future cash receipts and expenditures for a particular time period. It usually covers a period in the short term future. The cash flow budget helps the business determine when income will be sufficient to cover expenses and when the company will need to seek outside financing. Marketing budget: The marketing budget is an estimate of the funds needed for promotion, advertising, and public relations in order to market the product or service. Project budget: The project budget is a prediction of the costs associated with a particular company project. These costs include labor, materials, and other related expenses. The project budget is often broken down into specific tasks, with task budgets assigned to each. Revenue budget: The Revenue Budget consists of revenue receipts of government and the expenditure met from these revenues. Tax revenues are made up of taxes and other duties that the government levies. Expenditure budget: A budget type which include of spending data items.

1.3 Importance of Budget

Budgeting forces an in-depth understanding of where your money is Helps to reduce debt troubles

being spent

The first and most important step to effective financial planning is developing and implementing a budget. That, of course, sounds easy and even simplistic. But if it were so easy, do you think that so many millions of people would be as deeply in debt as they are? In its simplest form, budgeting simply means to live within one's financial means. This is in sharp contrast to the prevailing lifestyle of "living beyond your means". And how do you live beyond your means? The answer, of course, is by using credit. If your debt is already out of control, it will be that much harder to implement a budget. However, it's doubly important that you do begin a budget if you are in debt. Without one, it's a virtual certainty that you'll never be able to live without debt. A budget forces you to get your spending under control, to "live below your means". And if you have debt that must be paid off, living below your means is exactly what you're going to have to do. Only then will you free up money that can go toward reducing and eliminating your debt. If you have the desire for financial freedom, the most important thing you can do is to set up a budget. Without sitting down and figuring out what your total income and your total expenses are you will not be able to see what changes need to made in your spending habits in order to put aside some money through savings or investments to provide for future financial success. It is almost impossible to achieve financial freedom without being disciplined enough to make a budget and stick with it. A budget is a tool to help you track where changes can be made to improve your financial situation. Some people are able to achieve financial freedom without actually sitting down and doing a written budget, but this is the exception rather than the rule.

CHAPTER: 2. DISCUSS THE BUDGET OF 2010-11 Finance Minister AMA Muhith unveils the national budget at the Parliament for the fiscal year 2010-11, expectedly with the target of achieving inclusive growth through fostering investment and mobilizing more domestic resources. The growth, which is dented this year by the tail affect of the global recession, is supposedly targeted at 6.7 percent for the next financial year, which the economists believe achievable provided with ensured power supply and basic infrastructure facilities. The strategy of the fiscal account and the policy statement to achieve the target is also thought to be bigger allocation to power and infrastructure sectors, keeping speedy implementation of development agenda on the centre of attention. Economists and analysts meantime gave Muhith merit for his relatively success in better management (ADP), and an implementation area where of the Annual Development Programme the governments

achievement seldom get appreciation. The countrys leading think-tank, the Centre for Policy Dialogue (CPD), in its independent study revealed that the ADP implementation in terms of volume was significantly higher than any given year. The CPD also advocated the target of bigger allocation, which generally gets criticism as over ambitious. The total outlay for the next fiscal year is expected to be considerably higher for funding the cash-strapped power sector and the inputs for agriculture, education and social development projects. The total allocation, reported to be Taka 132,000 crore, will priorities spending in power generation, crop productions, ICT, education and capacity building of both the public and private sectors to contribute to and benefit from economic growth. Expanding

social safety-net may also get priority in line with the election pledges of this government. Speakers at a seminar said that formulation and proper implementation of a balanced budget can help establish a digital Bangladesh. The government has achieved tremendous successes in various sectors including agriculture during the outgoing fiscal and keeping prices of essentials within the reach of the common people despite global economic recession in recent years, they said. To keep up the successes, formulation of a more effective and balanced national budget is essential, they said. It is, however, understood that the overall budget deficit would be maintained at 5 percent, to the similar level of this current 2009-10 financial year with a coordinated approach to increase tax and non-tax revenue. The budget presentation this year will also get a graduation to digital technology when Muhith will be using PowerPoint, bringing an end to the tradition of reading hard documents. Besides this apparent change, Muhith is expected to bring a basic change to the approach of his fiscal statement. He earlier indicated that the next budget would focus on implementation of the already targeted projects instead of accommodating too many new things. This statement in one way indicates that the government has identified the major drawbacks to attain fiscal target, and the other way it suggests the next budget will have some specific policy directives to gear up the state machinery. Muhith will also outline the major reforms in the VAT (value added tax) collection machinery to mobilise more internal resources faster than ever when he will sketch the possible inflow of funds from external resources. Last year, Muhith introduced Public-Private Partnership (PPP), special allocations for creating jobs for ultra poor and establishment of a national service centre to facilitate people with jobs who have qualifications up to the

higher secondary level. The budget for the next year is also expected to address these areas. Economists, development partners and independent researchers have identified the major challenges that the economy may face in the coming days. These include the increasing inflation in the region, rising oil prices, resources for electricity generation and competitiveness of Bangladeshi produces on the global market. Analysts believe Muhith will be comforted with good harvest to maintain inflation while the increasing remittance flow will give him extra edge to maintain better position in external trade. The recent data of the Export Promotion Bureau (EPB) shows a positive turn in the export when Bangladesh Banks statistic indicates increasing trend in the capital machinery import, demonstrating rising investment. Economists, however, expect Muhith in his budget will have measurers to speed up the release of stimulus to the export sectors so they can compete successfully on the international market. This will be the 39th national budget of the country and the 11th of the Awami League government. The finance minister will also present the annual financial statement, supplementary budget, combined demand for grants, consolidated fund receipt and the Bangladesh Economic Review.

2.1 Discuss three sectors

CHAPTER: 3 DISCUSS THE BUDGET TO 2011-12 3.1 CHAPTER: 4 COMPARE BETWEEN THE BUDGET OF 2010 &2011 4.1 CHAPTER: 5 SUMMERY CONCLUTION AND RECOMMENDATION 5.1 Summery

5.2 Conclusion 5.3 Recommendation