IS BUDGET 2024 NOT THE 'REAL' UNION BUDGET OF THE YEAR? ~ Trendsduniya

An interim budget bridges the gap between the end of the financial year on March 31 and the formation of the new government. It is conventionally called a 'vote-on-account'.

Budget 2024 has already made headlines. Finance Minister Nirmala Sitharaman presented the budget for the new fiscal year, FY25, on Thursday, February 1.

However, you will be surprised that it is not the full-fledged budget applicable for the upcoming year.

What???

Yes, you heard it right! The internet and media are already flooded with the key highlights and points of Budget 2024, more specifically, INTERIM BUDGET 2024. You must have noticed the word mentioned in every online article and videos. But why an interim budget?

In this blog, we will understand what an interim Budget is and why it has been presented instead of a full budget in 2024.

Concept of an Interim Budget

This year, the Central Government has only released an interim Budget instead of the regular four-year fiscal Statements.

"An Interim Budget is a short-term financial plan presented by a government either during a period of transition of an existing government or during its final year before general elections."

2024 will be the election year, and an incumbent government cannot present a full Union Budget. The reason for that is obvious: election uncertainty and uninterrupted government function.

Why do we even need an interim Budget?

A union Budget for the new financial year starts in April. The voting process to elect the central government could begin in May and continue until June-July, i.e., results. That means until the new government is formed, the incumbent government still has to manage its expenses and revenues. However, the uncertainty of results leads to presenting a short-term budget for that transition period.

An interim budget bridges the gap between the end of the financial year on March 31 and the formation of a new government.

This temporary budget is essential for smoothly functioning and maintaining government expenses until D-Day (the results of the general elections).

There is no constitutional provision for an interim budget, but it became a common practice to avoid irregularities over govt expenses and management.

Applicability and Presentation

The duration of an interim budget is up to the transition period ( few months remaining of power). However, the estimates are presented for the whole year. It is presented on the same schedule as the Union Budget in a regular financial year.

When is the full budget released?

Once the Lok Sabha election results are out, i.e., the new government is formed, or the incumbent stays on, they will present a full-fledged budget. That should be sometime in July.

How is the Interim Budget different from the Full Union budget?

A full union budget is an annual comprehensive plan that deals with all government expenses and revenues. In contrast, an interim budget is just a short-term plan for a few months during an election year, primarily focusing on immediate expenses and revenues.

Restrictions of an Interim Budget.

Inclusion of any significant policy change announcements that can influence the voters unfairly is not permitted.

Vote-on-account

Only through the interim budget is a vote on account passed in Parliament. It is like a grant-in-advance to the government to function correctly until the voting process is complete.

One might need clarification on the difference between an interim budget and a vote-on-account. The former contains both the receipts and expenditures estimated for a whole year, whereas the latter deals with only governments' expenditures(primarily administrative).

The vote-on-account is usually valid for two months, and the period can be extended.

I am not going to play spoilsport, but it is a matter of truth that the February 1, 2024, budget that will be announced will just be a vote-on-account because we will be in an election mode. So the budget the government presents will just be to meet the government's expenditures until a new government comes to play,

said FM Sitharaman in December.

Conclusion

An interim budget is a temporary financial plan that allows the government to function during an election year until a new government is formed. It is different from a full union budget, which is a comprehensive plan for the entire fiscal year. An interim budget also includes a vote-on-account, a grant-in-advance for the government's expenses for a few months. An interim budget does not introduce significant policy changes that could influence the voters. It is a way of ensuring continuity and stability in the government's operations.

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