Budget Planning

the compiling and execution of the state budget in socialist countries. Budget planning is a component part of national economic planning. Budgets are worked out on the basis of national economic plan indexes (volume and sales of output, commodity turnover, wages fund, capital investments, and others); these budgets serve as an important lever for checking the balance relationships among particular elements of the plan and for revealing and mobilizing internal reserves. During the course of drawing up and executing the budget, which is based on use of the balance method, all the financial resources of the socialist state are coordinated; the main elements of financial and credit-cash plans are determined; the financial obligations of enterprises and amounts of their expenditures for expanding production, providing material incentives to the workers, and so on are established; and checks are maintained on the financial and economic activity of the enterprises and organizations. The primary task of budget planning is to ensure the fullest possible disclosure and mobilization of the economy’s internal reserves in order to provide the monetary means for a high rate of growth of the socialist economy, the systematic increase in the standard of living of the toiling masses, and the strengthening of the might of the state.

Budget planning in the USSR is based on the principle of democratic centralism which, during compilation and execution of the budget, ensures recognition of the sovereign rights of the Union republics and the rights of autonomous republics and local soviets of workers’ deputies, uniformity between the budget system and state financial policy, and participation by all bodies of state power and administration, enterprises and organizations, and broad layers of the population in drawing up and carrying out the budget.

As with the national-economic plan, the state budget is drawn up for the calendar year (from January 1 to December 31), which is considered the budget period. This ensures coordination between the state budget and the national economic plan and the plan of each enterprise, organization, and institution; in addition it gives budget allocations the necessary degree of definiteness and promotes checks on the observation of state financial discipline.

Budget allocations are strictly earmarked, and, in allocating capital, consideration is given to the degree of use and efficiency of previously granted budget capital and also to the amount of payments to budget incomes made by the productive enterprise or organization. During the process of shaping the state budget, the appropriate government administrative bodies (the Council of Ministers of the USSR and the Ministry of Finance of the USSR, the councils of ministers of the Union republics and republic ministries of finance, and so on) review the basic indexes of each budget depending on their subordination (republic, krai, oblast, and so on) and also consider calculations for the budgets of all ministries, departments, divisions of executive committees, and so on, in order to take fuller account of the requirements and resources of each republic, oblast, and raion and all sectors of the national economy. Then a draft of each budget is examined by the budget commissions and ratified at a session of the appropriate organ of state power (the Supreme Soviet of the USSR, the supreme soviets of the Union and autonomous republics, and the local soviets of working people’s deputies), which passes the law on the state budget of the USSR and laws on the state budgets of the Union republics or decrees on the budgets of the krai, oblast, and so on.

State enterprises, kolkhozes, and cooperative organizations make the payments they owe to the budget by transferring appropriate sums from their accounts in banks. Where there is failure to pay, the sums are exacted with a penalty; from state enterprises, on the order of financial bodies, they are written off on a compulsory basis; from cooperative organizations and kolkhozes it is done on the basis of court decisions. In the execution of the budget, budget capital is issued by opening credits or transferring capital to credit administrators. Financial bodies do this by transferring capital to chief credit administrators (ministries and departments, divisions of local soviets), whereas chief credit administrators transfer it to lower-ranking administrators (individual enterprises, schools, hospitals, and so on).

Budget execution in cash terms is carried on by the Gosbank (State Bank) of the USSR. It is based on the principle of cash office unity, that is, concentrating all budget capital at bank establishments that carry out the functions of receiving, keeping, and issuing it (according to the orders of financial bodies and appropriate credit administrators); these banks also submit reports on the use of budget capital. This system makes it possible to check the course of execution of budgets and to balance their incomes and expenditures.

In the capitalist states, the drawing up and execution of the budget has only the external form of budget planning. The methods of budget computations used there permit nothing more than determining the probable, contemplated totals of incomes and expenditures for the forthcoming year because it is impossible to anticipate the changes in economic conditions that are inevitable under capitalism. The budget of a bourgeois state is drawn up to redistribute national income by collecting taxes, selling bonds, and other methods, in the interests of the financial oligarchy and the strengthening of the capitalist system. Budgets in the capitalist countries are usually drawn up for one year, but in some countries, and also in a number of states of the United States, they are for two years.

Drawing up budgets in all the capitalist countries is an authorized function of the governments and their special agencies (the president’s Bureau of the Budget in the United States, the Chancellery in Great Britain, the Ministry of Finance in France). In Belgium drafts of the budget are submitted two months before the start of the budget year, in Italy it is five months before, in Great Britain seven months before, and in the United States six months before. Drafts of the budgets are submitted to the parliaments for ratification, but the rights of the latter to make any changes are extremely limited and are, for the most part, a formality. Execution of the budget is carried on by the government through chancellery offices (France) or banks (in most of the countries).