The Performance Budgeting is looked upon as a budget based on functions, activities and projects and is linked to the budgetary system based on objective and classification of expenditure. This budgeting lays immediate stress on the achievement of specific goals over a period of time. It requires preparation of periodic performance reports. Such reports compare budget and actual data and show any existing differences. The implementation of performance budgeting requires a series of steps. Along with a number of advantages, this technique has certain limitations too.