Union finance minister Nirmala Sitharaman will present the interim budget for 2024-25 on February 1. The full Budget for the fiscal year 2024-25 will be introduced after the formation of the new government following the general elections.
Last December, Sitharaman ruled out any “spectacular announcement” for her sixth budget on February 1 this year, saying it would simply be a “vote on account” before the general elections.
“No spectacular announcements come in that time (in a vote on account). So you will have to wait till after the new government comes in and presents the next full Budget in July 2024,” the minister said in response to a question about a “supercharged budget” during her address at the CII Global Economic Policy Forum.
In 2019, Piyush Goyal, holding additional charge of the ministry of finance after Arun Jaitley fell ill, had presented the last interim budget. After the Narendra Modi-led government secured a second consecutive term, Sitharaman was appointed as the finance minister, and she presented the full budget on July 5, 2019.
How is an Interim budget different from a full-fledged Budget?
The Interim Budget will outline the government’s anticipated receipts and expenditures until the new government is formed. In contrast, a comprehensive Budget encompasses all facets of government finances, including earnings, spending, allocations, and policy declarations.
A full-year Budget is a strategic guide, charting the nation’s economic trajectory for an entire fiscal year. The interim budget provides financial details for the transitional period.
With the Lok Sabha elections expected around April-May 2024, the new government will present a complete Budget in July 2024. On February 1, Sitharaman will present an interim budget for 2024-25 in Parliament, effective from April 1, 2024.
Traditionally, major policy announcements have been avoided during a vote on account, although there is no constitutional prohibition against making substantial announcements.
Also called a ‘vote on account’
Conventionally, an Interim Budget also known as ‘vote-on-account’ serves as an authorisation for incurring specific expenditures necessary until a new government assumes office.
Interim budgets have certain limitations imposed by the Election Commission of India to ensure no undue influence on the voters. The government cannot propose major taxes or policy reforms in the budget as it can influence voters in favour of the ruling dispensation.
“I am not going to play a 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 that the government presents will just be to meet the government’s expenditure till a new government comes to play,” Sitharaman said in December.
Preceding the vote-on-account, governments also abstain from presenting the customary pre-budget ‘Economic Survey’, a tradition usually observed a day before the full budget presentation. This survey, which outlines the economic state and key events, is typically presented alongside the full budget in Parliament in July.
Typically, a vote-on-account remains effective for a duration of two months, with the possibility of extension if necessary.
According to Article 116 of the Constitution, a vote-on-account signifies an upfront allocation to the government from the ‘Consolidated Fund of India’, specifically designated for addressing immediate expenditure needs. The Consolidated Fund of India contains all revenue generated by the central government, including taxes, interest on loans, and other such collections.
(With PTI inputs)