All you need to know about the budgets during election year

Budget 2024: With the general elections slated for 2024, Finance Minister Nirmala Sitharaman will soon begin meeting with ministries to draw the Interim Budget 2024. Prior to this, the interim Budget was presented ahead of the 2019 general elections by acting Finance Minister Piyush Goyal. The interim Budget introduced the Pradhan Mantri Kisan Samman Nidhi, which provided financial support to farmers, and the Pradhan Mantri Shram Yogi Mandhan, a social welfare scheme for poor labourers. But what is an Interim Budget, and why will it be presented instead of a full budget in 2024?

 

What is an interim budget?

During an election year, the incumbent government cannot present a full Union budget. Therefore, the finance ministers instead present an interim Budget that covers the government’s expenses and revenues for a short period until a new government is elected and takes charge.

Interim Budget can be defined as a temporary financial statement presented by the government of India during an election year.

 

What is the difference between an interim budget and a full budget?

The “full budget”, or the Union Budget, is the annual financial statement with the estimated costs and expenses of the government for the following financial year. The Union budget is also referred to as the annual financial statement in Article 112 of the Indian Constitution.

 

When is the interim Budget released?

The presentation of an interim budget follows the same schedule as the Union budget would in a regular financial year. Therefore, it should be presented on February 1, so it can be put into action by the beginning of the financial year in April.

 

When is the full Budget released?

After the general elections or Lok Sabha elections, the new government presents a full budget.

Why is an interim budget presented?

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

A government cannot present a full budget during an election year. Therefore, the ruling government puts together its financial performance and projections for the upcoming three to four months so that the country can run smoothly. This also gives time for the next government to form and draw the Union budget for the remainder of the financial year.

What can be included in the interim Budget?

The interim Budget includes estimates for the government’s expenditure, revenue, fiscal deficit, financial performance and projections for the coming months.

In recent years, the interim Budget has also been key for governments as a campaigning tool for general elections as it can outline the economic vision of the ruling party, should it return to power.

What cannot be included in the interim Budget?

No major policy announcements that can burden the next government can be presented in the interim Budget. The Election Commission of India’s code of conduct does not allow the interim Budget to include any major scheme in the Interim Budget as it could influence the voters. The ruling government is also not allowed to present the Economic Survey with the interim Budget.

What is vote-on-account?

The Parliament passes a vote-on-account through the interim Budget. This is a provision that allows the government to obtain Parliamentary approval for essential government spending such as salaries and ongoing expenses. It does not include major policy changes or new long-term projects, as those are typically addressed in the full Budget after the general elections. This is usually valid for up to two months but can be extended.

What is the difference between vote-on-account and interim Budget?

An interim budget is similar to a full budget but only has projections for a few months, as opposed to a full financial year. A vote-on-account deals specifically with expenditure and can be passed by Parliament without a formal discussion.

Why is interim Budget necessary?

There is no constitutional provision for an interim budget. However, it has become a common practice for outgoing governments ahead of elections. A ruling government can alternatively choose to obtain the necessary funds for expenses through the vote-on-account provision instead of presenting an interim budget.