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Business News/ Budget / News/  Budget 2024: Interim Budget vs Vote on Account. How the two are different?
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Budget 2024: Interim Budget vs Vote on Account. How the two are different?

On February 1, Finance Minister Nirmala Sitharaman will present the Interim Budget in Parliament with no major announcements as the elections for the Lok Sabha are due early next year. Here are some major differences between an Interim Budget and the Vote on Account

Budget 2024: Interim Budget vs Vote on Account (Photo: iStock)Premium
Budget 2024: Interim Budget vs Vote on Account (Photo: iStock)

On February 1, Union Finance Minister Nirmala Sitharaman will rise up in the Parliament to present the Union Budget for fiscal year 2024-25. The finance minister will present the Interim Budget in a joint sitting of the Rajya Sabha and Lok Sabha with no major announcements as the elections for the Lok Sabha are due early next year. The full Budget will be presented after the formation of the new government following the general elections. Prior to this, the interim Budget was presented ahead of the 2019 general elections by acting Finance Minister Piyush Goyal. Fourteen Interim Budget have been presented till now.

It is normal parliamentary practice that during the election year, the government does not present the full Budget, instead prepares an Interim Budget for the rest of its tenure and leaves the task of framing the full Budget to the incoming dispensation. The Parliament passes a vote of account through Interim Budget which gives the government temporary permission to meet the expenses of the administration until the next government is formed. The vote of account is normally valid for two months but can be extended. 

Also Read | Budget 2024: A quick guide on how to read the Budget document

It is common to be confused between Interim Budget and Vote on Account and sometimes people use both the terms interchangeably as they provide an essential function of ensuring that the government has adequate funding to perform its regular activities during the election year. But there are some fundamental differences between the two. 

The major difference between a Vote on Account and the Interim Budget is that the Vote on Account can’t impact the tax regime, whereas the Interim Budget can change it.

Also Read | Budget 2024: Interesting facts about the Budget presentation

What is the Interim Budget?

During an election year, the incumbent government can’t present a full Union Budget, hence the finance minister presents an Interim Budget that covers the expenses and revenues of the government until a new government is formed. Thus, as per parliamentary tradition, the outgoing government leaves the task of framing the full Budget to the incoming dispensation after the Lok Sabha elections.

Why is an interim budget presented?

A Union Budget is valid till the end of the financial year on March 31, hence the government has speeding rights only till that date. For the government expenditure occurring between March 1 until a new government is formed, the incumbent government needs permission from the Parliament to incur costs in the interim period. Hence, the interim Budget is released.

What cannot be included in interim budgets?

The interim budget generally includes estimates of expenditure, revenue, fiscal deficit, financial performance and projections for the upcoming financial year of the incumbent government. However, it cannot include any major policy announcements. According to the Election Commission’s code of conduct, an Interim Budget cannot include any major scheme as it may influence the voters. The incumbent government is not supposed to present the Economic Survey with the interim Budget.

What is Vote on Account?

Through the Interim Budget, the Parliament passes a vote on account to meet the essential government expenditures like salaries, ongoing expenses in various sectors etc before the general elections. It is passed as a convention without any discussion. It is usually valid for up to two months but can be extended.

Interim Budget vs Vote on Account: Major Differences

  • An Interim Budget consists of both expenditures and receipts whereas a vote-on-account lists only the expenditure beared by the government.
  • An Interim Budget has to be discussed in the Lok Sabha and then passed, on the other hand, the Vote On Account deals specifically with expenditure and is passed by the Lok Sabha without any discussion.
  • An Interim Budget can propose changes in the tax regime whereas the Vote on Account cannot change the taxes at any cost.
  • An Interim budget is similar to a full budget but only has projections for a few months whereas the vote-on-account can be passed through the interim budget.
  • An interim budget is valid for an entire year on the other hand a vote on account is usually valid for 2 months.

 

 

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Published: 14 Dec 2023, 06:15 AM IST
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