Question

3.      Auxiliary budgets – should they be allowed to generate a surplus? Should it be allowed to carry over or should it be transferred to the general fund?

4.      Subvention – is it a good idea? How long would you prop up a program before you decided to cut it?

Answer 1

3. Auxilary Budget:

Let us understand the meaning of Auxilary, they are self- supporting entities, deriving its business from the sale of services or goods. They work in isolation to generate the funds for their operational purpose & requires no support from central funds of the organization.

These budgets are created and maintained by the units themselves. So, the responsibility to generate the revenue as per the Budget lies with them and maintaining the funds to provide for the overheads also stays with them. They are definitely allowed to make surpluses.

So, in such cases, if the Auxilary Budgets are in surplus, it should be allowed to carry forward for the next cycle as these entities work in isolation. But if the organization requires the fund, these surpluses can become the lander of the last resort and can be transferred to the main fund of the organization.

4. Subvention:

Subvention in its purest form means a grant or subsidiary from the government.

These can be offered in numerous forms such as financial subsidies, Grants, Incentives, Capitalized cost reduction, Interest-free borrowings, etc.

Subvention from the government could be a good idea if they want to inspire a group of people or culture to embrace the change and make the impossible possible. They could become a helping hand to start the business and achieve the success that they dreamed. So, definitely this would a good initiative from the government.

In cases where the government could not see the benefits generated from such schemes or people are engaged in illegal activities just to get the grant money, in those times the government may decide to end such schemes.