India Budget 2024: What is an interim Budget? How is it different from a regular budget?

An interim Budget for 2024-25 will be presented by India's Finance Minister Nirmala Sitharaman on February 1, months before the country holds its next general elections.

The complete budget for the fiscal year 2024-25 will be tabled in the Parliament after the new government's formation post the general elections.

Sitharaman, while speaking about the interim Budget in December, ruled out the possibility of any “spectacular announcement” in her sixth budget on February 1, adding that it will simply be a “vote on account” before the next general elections.

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“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 had stated while responding to a question regarding a “supercharged budget” in her address at the CII Global Economic Policy Forum.

What is an interim Budget and how it differs from a full-fledged budget?

The interim Budget presented by an outgoing government outlines its anticipated expenditures and receipts till the formation of the new government.

Meanwhile, a comprehensive budget includes the different facets of government finances, which include earnings, spending, allocations, and policy declarations.

A complete budget is a strategic guide which charts the economic trajectory of the country for a complete fiscal year whereas only the financial information regarding the transitional period is provided in the interim Budget.

Also before the interim Budget, the government does not present the Economic Survey, which is a document prepared by the Chief Economic Advisor (CEA) and is generally presented a day before the Union Budget on February 1 each year.

This is because the regular budget process carries the chance of getting disrupted if there is a change in government.

In the wake of general elections to be held between April and May 2024, it is expected that a complete budget will be presented by the new government in July 2024.

Watch:Explained: India's interim budget 2024

On February 1, FM Sitharaman will table an interim Budget for the fiscal year 2024-25 in Parliament, which will come into effect from April 1, 2024.

In the past years, the incumbent government has always avoided major policy announcements during a vote on account, although no constitutional prohibition exists which stops the government from making substantial announcements.

Why it is called a ‘vote on account’?

An interim Budget conventionally is also called a ‘vote-on-account’ because it serves as an authorisation to incur specific expenditures which is necessary till a new government comes to power.

The Election Commission of India imposes certain limitations on the interim Budgets to ensure they have no undue influence on the voters. As per the limitations, the government is not allowed to propose major taxes or policy reforms in the interim Budget because that can influence people to vote 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," said FM Sitharamanin December.

Generally, a vote-on-account remains effective for a period of two months and can get an extension if required.

As per the Constitution's Article 116, a vote-on-account is an upfront allocation of budget from the ‘Consolidated Fund of India’ to the incumbent government and has been designated specifically to address immediate expenditure needs.

(With inputs from agencies)