Budget 2024: Differences Between Interim Budget, Regular Budget And Vote On Account | All You Need To Know

As India gears up for the Lok Sabha elections in April to May 2024, Union Finance Minister Nirmala Sitharaman is set to present an interim budget on February 1, 2024. This interim budget is expected to be a vote on account, lacking substantial policy announcements, as the government remains in election mode.

“It is a matter of truth that the February 1, 2024, Budget will be just a vote on account… we will be in election mode… so the Budget will just be to meet the expenditure no spectacular announcements are made at that time,” Nirmala Sitharaman said.

Let us understand what is an interim budget and how is it different from the vote on account:

Understanding Interim Budget:

An interim budget is presented when there is insufficient time for a full budget or when elections are imminent. It grants spending rights during the transitional period preceding the induction of a new government at the central level. This strategic financial framework is tailored to address the fiscal needs and revenue considerations of the recently formed government, typically spanning a few months until the new administration assumes office.

Differences from Regular Budget:

• The interim budget includes a vote-on-account, seeking approval for government expenses for a portion of the fiscal year.
• Transition Period: It serves as a budget for the transition period when the government has only a few months left in power.
• Estimates: Like a regular budget, it presents estimates for the entire year, subject to approval or modification by the incoming government.
• Tax Changes: While the Constitution allows tax changes in interim budgets, historically, major tax changes or new schemes have been rare.
• An interim budget includes the previous year's income and expenses report, with documentation of proposed basic expenses until elections.

Vote-on-Account:

• Purpose: Passed through the interim budget, the vote-on-account allows the government to meet expenses leading up to elections.
• Discussion: Unlike a full budget, the vote-on-account is passed as a convention without discussions.
• Grant-in-Advance: It serves as a grant-in-advance to the government, covering expenses until voting on demands for grants, and the passing of the Finance Bill and Appropriation Bill.
• Validity: Typically valid for two months, in contrast to a full budget that remains valid for a year.
• The vote-on-account focuses on government expenditure, while the interim budget addresses both receipts and expenditures. Due to its proximity to elections, the Election Commission has regulations against major policy changes in the interim budget that could unfairly influence voters.

As India anticipates the Lok Sabha elections, the upcoming interim budget is poised to be a crucial financial measure ensuring government functionality until the new administration takes charge post-elections. With no extravagant announcements expected, it will primarily serve as a pragmatic vote on account.