Budget 2024: What is interim budget, how it differs from full-year budget, and what is vote on account?

FM Nirmala Sitharaman will present the interim budget on February 1, 2024

In a year marked by the high-stake general elections, the central government is required to release an interim budget instead of the regular full-year fiscal statement.

With the Lok Sabha elections expected to be held between March and May in 2024, Finance Minister Nirmala Sitharaman will be presenting an interim budget, instead of a full-year budget, on February 1.

Here's a look at what interim budget means, how it differs from a full-year budget, and what is the vote-on-account that is necessitated in the absence of a regular budget.

Interim budget

As the term itself signifies, an interim budget is a temporary budget that is passed to sustain the expenditures for a couple of months, till a new government is elected.

Since the financial year ends on March 31, and a new government generally takes over in May-end or early June, an interim budget is needed to cover the expenses and revenues for the buffer period.

Thereafter, in July, the government that takes charge presents a budget for the remainder of the financial year.

The difference

A regular or a full-year budget is an annual financial statement, as mentioned under Article 112 of the Indian Constitution. On the contrary, an interim budget is a financial statement that generally covers a period of three to four months.

Secondly, a regular budget is divided into two broad parts: a detail on expenses and income in the outgoing financial year and the proposed expenses and revenue targeted in the forthcoming fiscal. In an interim budget, however, the second part is restricted to the estimated expenses and income generation only for a couple of months, by when the next government is expected to present a budget for the remainder of the year.

Due to this, an interim budget is expected not to be laced with big-ticket announcements. This was also indicated by Finance Minister Nirmala Sitharaman, as she said on December 7 that there will be "no spectacular announcements".

"No spectacular announcements will come at that time (in vote on account). So you will have to wait till after the new government comes in and presents the next full Budget in July 2024," she said, while speaking at the CII Global Economic Policy Forum.

"It is a matter of truth that February 1, 2024 budget that will be announced will just be a vote on account because we will be in an election mode. So the budget that the government presents will just be to meet the expenditure of the government till a new government comes to play," Sitharaman said.

So, what is vote on account?

Vote on account refers to the estimated expenditure which the government tables for passage ahead of the general elections. It covers the expenses that are required before a new government takes charge. The vote-on-account, similar to the fiscal document present in a regular budget year, must receive the nod of the majority in the Parliament.