What Is An Interim Budget? Here's How It Is Different From A Full Budget
An interim budget, however, is different from a vote on account, which allows the government to seek approval from parliament to meet its expenses for a short period, usually 2 months before elections
Finance Minister Nirmala Sitharaman is set to present the Union Budget for the Financial Year 2024-25 on February 1. With Lok Sabha elections slated to be held in April-June, this will be an interim budget.
What Is An Interim Budget?
An interim budget is a temporary financial plan presented by the government when an election is around the corner. This budget allows the government to meet the country's financial needs until a new government is formed and a full budget is presented.
Since a Union Budget is valid until March 31, the current government has spending rights only until that date. For expenses occurring between March 1 and the formation of a new government, the existing government requires permission from Parliament to bear costs during this interim period. Hence, an interim budget is presented.
Typically, an interim budget includes estimates of expenditure, revenue, fiscal deficit, financial performance, and projections for the upcoming fiscal year. However, it cannot feature major policy announcements, as per the Election Commission's Code of Conduct, to avoid influencing voters. The presentation of the Economic Survey along with the interim budget is also prohibited.
An interim budget, however, is different from a vote on account, which allows the government to seek approval from parliament to meet its expenses for a short period, usually two months prior to elections. It can be extended up to six months.
According to Parliamentary Affairs Minister Pralhad Joshi, Finance Minister Nirmala Sitharaman will present the interim budget on Feb. 1.
How Interim Budget Is Different From A Full Budget?
The main difference lies in the scope and duration. A full budget outlines the government's financial plans for the entire fiscal year, covering various sectors like education, healthcare, infrastructure, and more. On the other hand, an Interim Budget is a shorter-term solution, addressing the country's immediate financial requirements until a new government can decide on a comprehensive budget.
Why An Interim Budget?
During election years, the regular budget process might be disrupted due to the transition of power. The outgoing government presents an Interim Budget to ensure that essential services and government functions continue smoothly until the new government takes charge.
Key Takeaways
Timing: Interim Budgets are presented in election years, whereas full budgets are presented annually.
Duration: Interim Budgets cover a short period until the formation of a new government, while full budgets outline plans for the entire fiscal year.
Function: The Interim Budget is a stopgap measure to maintain financial stability during the election transition.
