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What is an Interim Budget? UPSC

Polity Notes
Difference Between Vote on
Account and Interim Budget
The Interim Budget makes headlines in the newspaper almost every year. The Interim
Budget is generally presented when the possibility of a regular budget is bleak. This is
usually passed during a time when the government is in power for a few months. Like a
regular budget, this budget is also passed for the whole year. It also contains documentation
about every detail of the penny earned and the penny spent by the government. Sometimes
the government would present an "Interim Budget" instead of a full one. Back then in
February 2019, just a few months before the national election Finance Minister Piyush
Goyal presented an interim budget. The incumbent government, post the results of the
election process, is empowered enough to make changes in this budget. However, it is
different from the regular Union Budget in many other aspects. The topic of the budget is
important from the perspective of the UPSC IAS Exam.

In this article, you can read about what is an Interim Budget, its features, and how it is
different from a regular budget as well as a Vote on an Account.

Also, read the Difference Between Finance Bill and Money Bill here.

What is Interim Budget?

An interim budget is presented by the government when the government does not have
time to present a full budget. Largely it is because the general elections are around the
corner.

Also, Read about the Important economic terms related to Union Budget here.

When is an Interim Budget Presented?

The Interim Budget is presented by the government when it does not have the time to
present a full budget. Mostly it is during the time of general elections when a full budget
cannot be presented.
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Hence a transition budget has to be presented before the election processes are done. Thus,
as per the set convention, the government of the day leaves the task of framing the full
budget to the incoming dispensation after the results of the elections process are out. This
ensures that the government's inaction would have the right until the end of the current
financial year.

After the results of the general elections are out, the new government can either change the
estimates or follow the estimates set in the interior budget. It is usually seen that in all the
14 Interim Budget passed by the various governments, no major policy changes or tax
changes have been introduced keeping in mind the fact that the government would last in
power only for only a few months.

The Interim Budget is similar to the regular budget in one aspect. Like the regular budget,
it is also presented for the whole year. However, the Election Commission binds the
government of the day, in the Interim Budget, by various policies which may not have any
influence on the voter’s choice before the beginning of elections and the election process
remains free of such biases.

Check out the Difference between Money Bill and Ordinary Bill here.

What is a Vote on Account?

The Vote on Account is passed through the Interim Budget. It allows the government of
the day to meet the administrative expenses for the remaining part of the fiscal year. This
is passed without any major discussion taking place in the lower house of the parliament,
unlike a regular budget where the budget is passed only after proper discussions taking
place. It is more like a grant in advance to the government of the day to function until the
voting on demand for grants takes place and the Financial Bill and Appropriation Bill is
passed in the parliament. The amount of grant is usually one-sixth of the total estimated
expenditure for the whole year under the various demands for grants. Unlike the regular
budget which is valid for one year, the Vote on Account is usually valid for a duration of
two months.

Also, Read about the Money Bill here.

Difference Between Vote on Account And Interim Budget

The Interim Budget and Vote on Account budget are meant to serve the purpose of the
government in meeting the administrative expenses. However, there are some minute
differences between both. These differences are mentioned in the tabular format to
represent the differences in a more comprehensive and easy-to-understand manner.

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Interim Budget Vote on Account

The Vote on Account is passed through the
The Interim Budget is passed when it is
Interim Budget. It seeks parliamentary
not feasible for the government to present
approval for the government of the day to meet
a full budget that is during the time of
expenses for the remaining part of the fiscal
general elections.
year.
Unlike the Interim Budget, a Vote on Account
It consists of both the receipts and the
lists only the expenditure statements to be
expenditure statement.
borne by the government.
The Interim Budget has to be discussed in Since the Vote on Account is treated more like
the Lower House of the parliament and a formal matter it can be passed by the Lower
passed to allow the government to meet House of the parliament without any
its administrative expenses. discussion.
The Vote on Account is not empowered to
The government is empowered enough to
make any changes in the direct cost. Any
make changes in the tax administration
changes in the direct tax can be brought about
even in the Interim Budget.
only by the Finance Bill.
It is like a budget that is presented for a
transition period. However, it is presented The Vote on Account is passed through the
for the whole year just like a regular Interim Budget.
budget.

The differences between Interim Budget and Vote on Account can help the aspirants in
solving questions in the exam.

Occasions on which an Interim Budget was presented in India

Interim Budget Timeline

Presented by Year Events

R K Shanmukham November When the Constituent Assembly’s Budget passed
Chetty 26, 1947 in March 1947 ceased because of partition.
CD Deshmukh 1952-1953 Prior to first General Elections
TT 1957-58 Prior to second General Elections
Krishnamachari
Morarji Desai 1962-63 Interim Budget was presented
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1967-68
Y B Chavan 1971-72 Interim Budget was presented
Haribhai M Patel 1977 It was the first time an interim budget was given
by a finance secretary and a former bureaucrat,
and it was also the shortest interim budget
presented.
R Venkataraman 1980-81 When Janata government lost power to Congress
(I)
Yashwant Sinha 1991 When the Chandra Shekhar government was
dissolved
Dr Manmohan 1991-92 Interim Budget was presented
Singh
Yashwant Sinha 1998-99 During Atal Bihari Vajpayee’s government
Jaswant Singh 2004-05 in the final year of Atal Bihari Vajpayee-led NDA
government
Pranab 2008-09 End UPA’s first term
Mukherjee
P Chidambaram February 17, It was presented at the end of UPA’s second term
2014
Piyush Goyal 2019 Before the first term of the NDA government led
by PM Narendra Modi ended

Also, Read about the Treasury Bills here.

Concerns Associated with the Interim Budget

The last Interim Budget was in 2019 and was presented by Finance Minister Piyush Goyal
on 1st February 2019. The concerns associated with the Interim Budget are listed below:

• The ruling administration is prohibited from including any substantial projects in

the interim budget by the Code of Conduct for the Election Commission since
doing so would sway voters. This is because incorporating such projects would go
against the rule.

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• While presenting the Interim Budget, it makes no mention of any significant policy
changes that would place a heavy financial burden on the succeeding
administration in charge of presenting the full Union Budget.
• The government in the rule does not provide the Economic Survey that is generally
provided in accordance with the adoption of the Interim Budget.

How is Interim Budget different from Union Budget?

Difference between Interim Budget and Union Budget

Interim Budget Union Budget

Lok Sabha passes a vote on the Union Budget requires a detailed discussion
account without any discussion. in the Lok Sabha before the passing of the
budget .

The Interim Budget is passed by
the Central Government right
before the general election
because there is not much time
left for it to present a full budget.
The Union Budget is the annual budget that
the Central Government submits to the
Parliament.

The Interim Budget includes Union Budget provides a more thorough

information on the previous year's
income and expenses as well as
the costs for the upcoming months
until the new government takes
office.
However, the Interim Budget
statement will not include the
source of money.
record of the two distinct portions.
The government's previous year's income
and expenses are covered in one section,
and the government's plan for raising
money through various means and using
that money for national development is
covered in the other.

Before the general elections, the The Union Budget serves as the
interim budget is presented for the Government's main financial statement for
first two to four months of the the entire fiscal year,
fiscal year.

Only a summary of the expenses The Union Budget includes comprehensive

and profits from the prior year is information regarding the costs and
detailed in the interim budget. revenues from the prior year.

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The account of the income from
taxes is not included in the interim
budget.
The Union Budget particularly includes
information on how the Government will
raise money through taxes and spend
money on various social welfare
programmes to advance the nation.

UPSC Previous Year Questions on Interim Budget

1. Q) What is the difference between “vote-on-account” and “interim budget”? [CSE

2011]
2. The provision of a “vote-on-account’’ is used by a regular Government, while an
“interim budget’’ is a provision used by a caretaker Government
3. A “vote-on-account’’ only deals with the expenditure in the Government budget,
while an “interim budget’’ includes both expenditure and receipts

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

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