Union Finance Minister Nirmala Sitharaman will present the interim budget for the fiscal year 2024-25 on February 1, 2024, with no big announcements made prior to the 2024 Lok Sabha elections, which are expected for early next year. However, the full budget for fiscal year 2024-25 will be released upon the formation of the new government following the general elections.
India appears to be a bright spot in an otherwise bleak global economic forecast. For FY24, India's economic growth predictions range from 6.3 percent (IMF and World Bank) to 6.5 percent (RBI). In contrast, the IMF predicts that global growth would fall from 3.5 percent in 2022 to 3 percent in 2023 and then to 2.9 percent in 2024.
An interim budget is provided by a government in transition or in its final year in power before the general elections scheduled every five years. In an election year, an incumbent government cannot deliver a full Union Budget; instead, the finance minister presents an interim budget during the joint sitting of Rajya Sabha and Lok Sabha in Parliament.
The interim budget includes full documentation of all expenses to be incurred as well as every rupee to be earned through taxes in the months leading up to the elections. With this budget, the existing government asks Parliament's consent to withdraw funds from the consolidated fund of India, into which the government deposits all of its revenue, in order to cover its budget expenses before the end of the fiscal year. In addition to a detailed projection of revenue and spending, the interim budget includes some policy actions. Interim budgets have recently been used by incumbent administrations to highlight their accomplishments in order to gain voter support.
What can and cannot go into interim budgets?
The ruling government publishes estimates of its expenditure, revenue, fiscal deficit, and financial performance, as well as expectations for the future fiscal year, in the interim budget. The ruling government presents an interim budget for three to four months towards the conclusion of its tenure to keep the country running. The likely focus of the incumbent government in this budget can be to outline its economic vision for the next five years, should it return to power.
An interim budget, on the other hand, makes no substantial policy announcements that could financially burden the next government, which will deliver the full Union Budget. The ruling administration cannot include any substantial initiative in the Interim Budget, according to the Election Commission's Code of Conduct, because it could influence voters. Furthermore, the current government does not present the Economic Survey alongside the Interim Budget.
A budget is divided into two parts: the previous year's spending and income, and the proposed expenses and income generation for the following year. The first part will remain unchanged in the interim budget. However, the second section will only include verification of essential expenses up until the election.
What exactly is a 'Vote on Account'? The 'Vote on Account' is just an estimate of the expenses required by the outgoing administration before the general elections. The 'Vote on Account' only addresses government spending. The 'Vote on Account' generally lasts two months but can be extended.
Is the incumbent administration required to present the interim budget? While the government might choose not to offer an interim budget and instead obtain the funds needed for spending through the 'vote on account' approach, governments often present an interim budget during election years.
