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  • Thu. Dec 5th, 2024

Difference between an Interim Budget and Vote-On-Account

ByULF TEAM

Jan 16, 2024 #Economy
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The Finance Minister is all set to present her sixth Budget in a row and since it is a general elections year, the government will be allowed only to present an Interim Budget or Vote-on-account instead of a regular full Budget.

About Interim Budget vs Vote-On-Account:

  • An interim budget serves as a framework for managing provisional expenditures over a short duration, usually spanning a few months, until a new government takes office at the central level.
  • An interim budget generally includes the current state of the economy, plan and non-plan expenditures and receipts, changes in tax rates, revised estimates of the current financial year, and estimates for the coming financial year.
  • Despite being presented for the entire year, similar to a regular budget, the interim budget is subject to constraints imposed by the Election Commission.
    • These constraints aim to prevent the government from implementing policies that could unduly influence the general public before the commencement of voting.
  • The Parliament passes a Vote-on-account to meet essential expenditures such as salaries of central government staff, funding of ongoing projects, and other government expenditures.
    • In other words, it accounts for only expenditures to be borne by the outgoing government for a period of two months, which may be extended to four months on special circumstances.  
  • The interim budget serves as a financial plan during a transitional period, typically when there are only a few months left in the current government’s tenure. The vote-on-account can be approved within the framework of the interim budget.
  • Like a full budget, an interim budget will be discussed and passed in the Lok Sabha, and in the case of a vote-on-account, it will be passed without any formal discussion as such.
  • An interim budget can propose changes in the tax regime, whereas a vote-on-account cannot change the tax regime under any circumstances.
  • Vote-On-Account is a parliamentary approval for withdrawing money from the Consolidated Fund of India from April to June/July or until the new Government presents its full-fledged budget. 
    • It can be termed an advance grant, interim arrangement, and authorisation for the outgoing government to draw the money from the above-said fund and meet short-term expenditures.
  • As far as validity is concerned, the interim budget is valid throughout the year whereas the vote-on-account is valid only for a period of two to four months.

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