Under zero-based budgeting, which of the following statements is correct?
- A Each year's budget is prepared by adding a fixed percentage increase to the previous year's allocation
- B Only new programmes require justification while continuing programmes are funded automatically
- C Every budget item must be justified afresh from a base of zero in each budgeting cycle ✓
- D The budget is fixed at zero growth regardless of inflation
Correct answer: C. Every budget item must be justified afresh from a base of zero in each budgeting cycle
Explanation
Zero-based budgeting requires managers to justify every activity and rupee requested anew each cycle, starting from zero rather than from last year's figures. This contrasts with incremental budgeting (option A), where prior allocations are adjusted upward. Option B describes conventional incremental practice, the very habit zero-based budgeting was designed to eliminate, forcing review of whether old programmes still merit funding.
Reference: Park's Textbook of Preventive and Social Medicine, 27th ed.
High-yield for: NEET PGINI-CETNExTFMGEUSMLEPLABMRCP
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