Distinguishing Between Interim Budget and Vote-on-Account: Understanding the Variances

11 Jan 2024 , 09:39 AM

On February 1, Finance Minister Nirmala Sitharaman will deliver the Union Budget. The government will not be providing a full budget because this is an election year. Rather, until a new administration is elected, an interim budget lays forth plans for handling spending and income.

Following the general elections that are scheduled for April or May 2024, a new government will enter office and provide a complete budget for the remaining part of the fiscal year.

By using the vote-on-account provision, the departing administration can secure the required money without having to produce a temporary budget.

Temporary Financial Plan (Interim budget)

There are usually a few restrictions placed on interim budgets by the Election Commission. This is done to make sure that policy changes by the government don’t unreasonably affect how the public votes in general elections.

The government’s earnings and outlays for the previous fiscal year are reflected in the interim budget. Expenses that will probably be incurred in the next months before the new government assumes power are also mentioned in the proposal. Proposals for the income component of the budget through tax collection are not included in interim budgets.

The government is not permitted to table the Economic Survey along with the interim budget, in contrast to the usual budget presentation.

Vote On Account: What Is It?

According to Article 116 of the Indian Constitution, a vote on account is an advance payment made by the government from the Consolidated Fund of India to meet immediate expenses. The central government of India accounts for all the money it receives from taxes, loan interest, and other sources of income under the Consolidated Fund of India. Any withdrawal from this corpus requires an annual Union Budget appropriation that is mandated by law and authorized by the federal government.

Before spending any funds from the Consolidated Fund, the government will need approval at the start of the new fiscal year. The Parliament’s temporary approval of the government’s spending, pending the passage of appropriation measures, is known as a vote on account.

Up until the new administration takes office and releases a complete budget, the revenue and expenditure information for the interim period is included in the interim budget. A vote on account, on the other hand, exclusively takes government spending into consideration.

Before passing the interim budget, it must be discussed, deliberated over, and approved by the Lok Sabha. Vote on account, on the other hand, is a formal process that the Lok Sabha may adopt without debate. The tax system can be changed by the government in the interim budget, but a vote on account cannot change it.

For feedback and suggestions, write to us at [e-mail]