Highlights of Interim Budget 2024

The upcoming Union Budget for the fiscal year 2024-2025, to be presented by Finance Minister Nirmala Sitharaman on February 1, 2024, is slated to be an interim budget due to the impending Lok Sabha elections.

An interim budget serves as a provisional financial plan for the government, catering to expenditure needs until a new government formulates a comprehensive budget. Notably, the interim budget is valid until March 31, the end of the financial year, with the government having spending rights only until that date.

During the interim period, the government requires Parliament’s permission to incur costs between March 1 and the formation of a new government. The interim budget typically includes estimates of expenditures, revenues, fiscal deficits, and financial performance, outlining projections for the upcoming fiscal year.

A key component of the interim budget is the “Vote on Account,” which is a parliamentary approval for essential government expenditures like salaries and ongoing expenses. Passed as a convention without discussion, the Vote on Account is usually valid for up to two months but can be extended.

The interim budget encompasses both expenditures and receipts, can propose changes in the tax regime, and requires discussion and approval in the Lok Sabha. In contrast, the Vote on Account lists only government expenditures, is passed without discussion, and cannot change taxes.

Understanding the economic implications of these budgets is vital for comprehending India’s fiscal planning and governance. Interim budgets ensure financial stability during transitional periods, preventing disruption, while full-year budgets act as roadmaps, guiding the country’s economic direction for an entire fiscal year. The full-year budget influences investor sentiment, driving economic activities and shaping market expectations, reflecting the government’s commitment to various sectors and reforms.

_{Repurposed article originally published in News 18}