Budget Explained: The difference between interim Budget and full-year Budget decoded

Budget Explained: With general elections just around the corner, Finance Minister Nirmala Sitharaman will present an interim budget instead of a regular full-year budget for the next fiscal year on February 1. This will be the sixth budget presented by her. Let's understand what an interim budget is and why there will not be a regular budget in 2024.

What is an interim budget? 

An interim budget includes all the financial statements of expenses incurred along with income earned in the previous year. It also includes the expenses expected to be held in the next few months until the new government takes charge. 

It should be noted that during the transition period, the ruling government must have the Parliament's permission to withdraw funds from the Consolidated Fund of India, into which the government deposits all of its revenue.

Why is an interim budget prepared instead of a full-year budget? 

During the election year, it is unrealistic for the ruling government to prepare a full-year budget and pass it, as after the election, the power may have to be passed on to the next ruling government.

The interim budget gives time for the next government to form and draw the Union budget for the remaining financial year.

Why is an interim budget necessary?

There is no constitutional provision for an interim budget. But it's now standard procedure for the departing government to do so before elections. Alternatively, rather than producing an interim budget, a ruling administration may decide to use the vote-on-account option to secure the required cash for expenses. 

What is a vote-on-account? 

An interim budget is passed after the vote on account. "Vote-on-Account" is a unique mechanism that allows the ruling government to ask the Parliament for approval for funds sufficient to incur expenditure for a part of the year (till the formation of a new government). 

What can and cannot be included in the interim budget?

Estimates for the government's spending, revenue, fiscal deficit, financial performance, and expectations for the following months can be included in the interim budget. 

Whereas the interim budget cannot include any substantial policy pronouncements that may burden the next government.

How is the interim budget different from the full-year budget?

A budget consists of two parts -- income and expenses of the previous year and expenses to be incurred in the next year. The interim budget has the first part of the previous year's income and expenses, but the second part will only have the most basic expenses up until the election.

Will another budget be prepared after the election? 

The ruling government prepares an interim budget for the rest of its tenure and leaves the task of framing the full budget to the incoming dispensation.

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