Mains Paper 3: Economy | Mobilization of resources
From UPSC perspective, the following things are important:
Prelims level: Interim Budget
Mains level: Difference between normal and interim budget
- Union finance ministry is all set to discuss its interim budget ahead of the general elections.
Lets have a look over what is:
- The budget for the year approved by Parliament gives the government spending rights only till the end of the financial year ending March 31.
- If for any reason the government is not able to present a full budget before the financial year ends, it will need parliamentary authority for incurring expenditure in the new fiscal year until a full Budget is presented.
- Through the interim Budget, Parliament passes a vote-on-account that allows the government to meet the expenses of the administration until the new Parliament considers and passes the Budget for the whole year.
Vote on Account
- Through the interim Budget, Parliament passes a vote-on-account that allows the government to meet the expenses of the administration until the new Parliament is elected.
- It is a grant in advance to enable the government to carry on until the voting of demands for grants and the passing of the Appropriation Bill and Finance Bill.
- This enables the government to fund its expenses for a short period of time or until a full-budget is passed.
- Normally, the Vote on Account is taken for two months only.
- The sum of the grant would be equivalent to one sixth of the estimated expenditure for the entire year under various demands for grants.
- As a convention, a vote-on-account is treated as a formal matter and passed by Lok Sabha without discussion.
How does the interim budget differ from a regular budget?
- In an interim Budget, the vote-on-account seeks parliament’s nod for incurring expenditure for part of a fiscal year.
- However, the estimates are presented for the entire year, as is the case with the regular Budget.
- The incoming government has full freedom to change the estimates completely when the final Budget is presented.
Can the government levy new taxes and propose new policies?
- Constitutionally, the government can make tax changes in the interim budget.
- However, the 12 interim budgets since Independence have respected the fact that the government is a custodian for a few months and have refrained from announcing big-ticket changes or new schemes.
- The government cannot present a full budget because in such a short session, there’s no time to debate proposals in Parliament.
- Expenditure for new schemes will have to form part of the new budget, which can be approved only after April 1.
- The newly formed government cannot be burdened by the previous government’s budgetary allocations.
- While these are the technicalities, many look upon the vote on account as election rhetoric.
- Many look at it as a window where the government highlights its achievements ahead of elections.