Finance Minister Nirmala Sitharaman will be presenting the Union Budget on February 1. Since it is an election year, the government will not be presenting a full-fledged budget. Instead, an interim budget makes provisions for managing expenses and revenues for a short period until a new government is elected.
A full budget for the remaining portion of the fiscal year will be presented after the new government takes charge following the general elections due in April-May.
The outgoing government can obtain the necessary funds through the vote-on-account provision instead of presenting an interim budget.
Interim Budget
Interim budgets typically have several constraints imposed by the Election Commission. This is done to ensure that the government doesn’t implement policy changes that could unduly influence the general public in voting for the general election.
The interim budget includes a report card on the income and expenses made by the government in the preceding fiscal year. The proposal also mentions expenses likely to be made in the next few months till the new government takes charge. Interim budgets do not make proposals on the income part of the budget through the collection of taxes.
Unlike the regular budget presentation, the government is not allowed to table the Economic Survey with the interim budget.
Also: Should the basic tax exemption limit be raised in Budget 2024?
What is Vote On Account?
A vote on account, as defined by Article 116 of the Constitution of India, is an advance grant to the government from the Consolidated Fund of India to cover short-term expenditures. The Consolidated Fund of India is an account for all the revenue generated by the central government through taxes, interest on loans and other such collections. For any withdrawal from this corpus, an appropriation undertaken by law and approved by the central government each year through the Union Budget is needed.
When the new financial year begins, the government will require permission to spend any money from the Consolidated Fund. Vote on account is the Parliament's interim approval of the government’s spending as passing the appropriation bills may take time.
Also see: Budget 2024: Key terms to understand before Sitharaman’s speech
In a nutshell...
An interim budget contains both the revenue and expenditure details for the period until the new government takes over and presents a full budget. On the other hand, a vote on account includes only the government’s expenditures.
The Lok Sabha needs to discuss, deliberate and approve the interim budget before its passage. In contrast, vote on account is a formal procedure and could be passed by Lok Sabha without discussion. The government may modify the tax system in the interim budget, however, it cannot be altered with a vote on account.
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