What is the primary objective of 'zero-based budgeting' in the context of government fiscal management?

To justify every allocation in each budget cycle rather than relying on previous year's figures

To eliminate all welfare schemes to reduce the fiscal deficit

To automatically increase budget allocations by a fixed percentage annually

To ensure that all government expenditures are funded through debt

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20 August 2026

Editorial: Tamil Nadu budget and fiscal management

The topic provides a detailed analysis of fiscal management, CAG findings, and budgetary reforms like zero-based budgeting, which are core components of the GS3 and GS2 syllabus regarding public finance and governance.

Notes

Tamil Nadu fiscal challenges: High debt, revenue account deficit, and limited fiscal space due to committed expenditures (salaries, pensions, interest, welfare).
CAG findings (2023-24): Net underspending of ₹33,302.53 crore; unnecessary supplementary provisions identified in 81 cases.
Accounting gaps: 2.89% of revenue expenditure and 6.14% of revenue receipts remained unreconciled with Accountant General records.
Zero-based budgeting: A system where allocations must be justified annually rather than continuing based on historical precedent.
Performance-based budgeting: Shifting focus from financial outlays to measurable outcomes (e.g., cost per km of road, cost per household for water).
Revenue augmentation: Need to address compliance gaps (e.g., GST irregularities) and identify unregistered taxpayers before increasing tax rates.
Competitive bidding: Evidence shows that transparent, wider bidding processes can significantly reduce project costs compared to official estimates.
Institutional reforms: Establishment of Expenditure Reforms Committee and Revenue Augmentation Committee to improve fiscal discipline and efficiency.

Part of a longer story

This is day 12 of 13 in Tamil Nadu public finance and SPSU fiscal health, which has been running since 23 June 2026. Reading it whole is usually worth more than reading today alone — the exam asks how something developed.

Questions

Explain the concept of zero-based budgeting and discuss its potential role in improving the fiscal health of Indian states. 150 words

Attempt this — 150 words in 8 min

0 / 150 words 8:00
Fiscal consolidation at the sub-national level requires a shift from input-based budgeting to outcome-based governance. Elaborate on this statement with reference to the need for expenditure reforms and improved revenue compliance in Indian states. 250 words

Attempt this — 250 words in 11 min

0 / 250 words 11:00

Prelims

What is the primary objective of 'zero-based budgeting' in the context of government fiscal management?

Syllabus

Topics

Sources

Before new taxes, making every rupee count

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