An interim budget is presented by a government in its last year in office when general elections are due after the start of a fiscal while a vote-on-account is an alternative to an interim budget and has only an estimate of expenses required during the transition period.
Arvind Datar, an advocate and a High Court lawyer, discussed the differences between an interim budget and a vote-on-account.
“Basic rule is that a vote on account under article 116 of the constitution is basically a short-term arrangement. What happens is if technically, it is not possible to present the finance bill – that is the annual financial statement – and get it passed before the elections then you make a vote on account because then you just get sanctions for expenditure, which is required for the next three months or four months."
"So suppose the gap between the budget and the election is three months then you ask for one-fourth the expenses for different ministries are sanctioned by parliament. That is because under the constitutional and the annual financial statement, you have to present demands from various ministries, these have to be voted on by parliament and approved by parliament. Last year, the budget was presented on February 1 and the finance bill got approved on March 29, so technically speaking, this year there is nothing to prevent the finance minister from presenting a full-fledged budget on February 1 and get it passed by March 29 or March 31, which is well before the elections. So he can do that,” Datar told CNBC-TV18 on Tuesday.
Explaining the difference between an interim budget and a full-fledged budget, he said, “The only thing is there has been a convention and if you have an interim budget, typically in the election year, they don’t present the full-fledged budget, they present an interim budget and the difference between an interim budget and a vote on account is that vote on account is only getting sanctioned for expenditure whereas an interim budget is like a mini-budget. It has got all the ingredients of a budget but they don’t normally make major changes on taxation and so on and so forth. They just have a budget, which combines everything for a short-term period. So legally, there is nothing in the constitution that prevents a government from passing a full-fledged budget this time."
Talking about the government's rationale behind presenting an interim budget in an election year, Datar said, “If they present an interim budget, it will be the 13th time. So every time the election comes, there has been a convention of presenting only an interim budget or at least a vote on account. Technically speaking, nothing prevents the government from presenting a full-fledged budget but if they want to follow convention, they should perhaps present an interim budget. If they present a budget and they make some major policy changes and hypothetically if a new government comes, it can completely reverse the whole thing in the same year, which will lead to deep consequences. So that is why conventionally they say, just make a budget for the election, don’t make major changes and when the government comes – whether the same government or a new government – then they get time to present the proper budget".
“In the Constitution, there is no such concept as an interim budget. These are just conventions which are being followed from time to time where you can present two budgets in a year, one is called the interim budget and one is called the proper budget. I think if the government follows the convention, they will present an interim budget and if they give some farm-loam sops then I don’t think any party is going to oppose it. That is also a problem. My best guess is, if it has happened for 12 times, perhaps the 13th time the government should pass an interim budget and wait for the election and then pass a proper budget with all changes in the finance act and so on and so forth,” he added.