BTL 859 - Rolling Budget

 

The Banking Tutor’s Lessons

BTL 859                                                                               12-01-2026

Rolling Budget  

A rolling budget, or continuous budget, is a dynamic financial plan that constantly updates by adding a new future period (like a month or quarter) as the current one ends, maintaining a consistent forward-looking horizon (usually 12 months).

Unlike static budgets, it offers greater flexibility, accuracy, and responsiveness to changing market conditions, making it ideal for volatile environments, but requires significant effort and resources for regular updates and analysis.

Working of Rolling Budget

Start with an annual budget: A company creates a detailed budget for the upcoming year (e.g., January-December).

Roll forward: At the end of the first month (January), that month's actual results are reviewed, and a new month (January of the next year) is added to the budget.

Repeat: This process repeats monthly or quarterly, always keeping a 12-month (or similar) outlook active and updated.

Advantages

Flexibility & Agility: Adapts quickly to market changes, performance issues, and new opportunities.

Improved Accuracy: Uses recent data, leading to more realistic forecasts.

Proactive Decisions: Helps identify issues and opportunities earlier.

Better Alignment: Keeps financial plans aligned with current strategic goals.

Disadvantages & Challenges

Time-Consuming: Requires continuous effort from all departments.

Resource-Intensive: May need new software or tools.

Employee Strain: Can cause "changing goalposts" frustration.

Costly: Implementing and maintaining can increase overhead. 

Best For - Industries with rapid changes (e.g., tech, marketing).

Companies needing strong financial agility and real-time insights. 

Not Ideal For - Industries with very stable, predictable conditions where static budgets suffice. 

Madhya Pradesh is set to become the first state in India to introduce a rolling budget framework, with indicative estimates prepared for three consecutive financial years. As an innovation, the Government of Madhya Pradesh  is preparing indicative budget estimates for 2027-28 and 2028-29 alongside the 2026-27 budget.

Sekhar Pariti

+91 9440641014