What Is An Interim Budget? And How Does It Different From Full Budget?

The Union Budget is an essential financial plan that outlines the government’s revenue and expenditure for the upcoming fiscal year. However, in certain circumstances, instead of a full Union Budget, the government presents an “interim budget.” But what exactly is an interim budget, and how does it differ from the full budget? Here’s everything you need to know.

What is an Interim Budget?

An interim budget is a temporary financial statement presented by the government when it cannot pass a full budget, usually because a general election is imminent. In such cases, the government prepares a provisional budget to ensure there is no disruption in financial operations until the new government takes over after the elections.

Why Not Just Let the New Government Present a Full Budget?

The Union Budget is designed to cover the entire fiscal year, running from April 1 to March 31. When the government cannot present a full budget before the end of the current fiscal year, an interim budget becomes necessary. It allows the government to continue spending until the new government takes office and presents its full budget.

What is a Vote-on-Account?

In an interim budget, the government seeks parliamentary approval through a vote-on-account. This process grants temporary permission to meet essential expenses until the elections are held and a new budget is passed. Typically, a vote-on-account is valid for two months, though it can be extended if necessary.

Is an Interim Budget Different from a Full Budget?

While both the interim budget and the full budget include a comprehensive set of accounts, including receipts and expenditure estimates, the key difference lies in their scope and purpose. An interim budget is temporary and does not include major new tax changes or schemes. Though not constitutionally required, the government usually refrains from announcing significant policy changes in an interim budget, especially during an election year.

On the other hand, a full budget is more detailed, including proposed policy changes, tax reforms, and long-term financial strategies for the country.

Are an Interim Budget and Vote-on-Account the Same?

No, an interim budget and vote-on-account are different. An interim budget is a broader document that includes both revenue and expenditure estimates for the coming year, even though it’s temporary. A vote-on-account, however, deals only with the expenditure side of things, and it is typically passed without a formal discussion in Parliament.

Is an Interim Budget Mandatory?

No, presenting an interim budget is not mandatory. The government could choose to bypass it and obtain the necessary funds via a vote-on-account alone. However, it is conventional for the government to present an interim budget in the election year to maintain transparency and accountability.

 Understanding the Purpose of an Interim Budget

An interim budget serves as a bridge between the end of the current fiscal year and the start of the next, particularly when an election disrupts the budgetary process. While it allows for essential spending, it does not introduce major policy changes or tax reforms. Understanding the difference between an interim budget and a full budget is crucial to grasping how the government manages its finances during an election year.

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