Budget 2024: ‘Vote on Account’ in India’s 2024-25 Financial Plan

The upcoming Union Budget for 2024-25, scheduled for presentation on February 1, 2024, is anticipated to be a non-event according to Prime Minister Narendra Modi. He mentioned that Finance Minister Nirmala Sitharaman will present the budget with ‘disha-nirdeshak baatein’ (directive discussions) during the parliamentary session.

During a press conference last December, Sitharaman referred to the budget as a ‘Vote on Account’ and cautioned the industry and the public against expecting anything extraordinary from the upcoming fiscal plan as the government is in election mode. This practice aligns with the traditional approach of presenting an interim budget when elections are imminent.

What is a Vote on Account?

The provision of Vote on Account, outlined in Article 116 of the Indian Constitution, empowers the Government to access funds from the Consolidated Fund of India for a limited period, usually a few months, to meet essential expenditure needs. It acts as a temporary solution to sustain vital government functions and public services until a comprehensive budget is presented and approved by the incoming government.

As general elections approach, the existing government may function in a caretaker capacity, with limited authority to make significant policy decisions or introduce new budgetary provisions. The Vote on Account ensures continuity in governance by providing funds for routine expenditures and essential government functions until a new government takes charge.

How is a Vote on Account different from an Interim Budget?

The Interim Budget is a thorough financial statement presented by the incumbent government when general elections are imminent or after the government’s term, encompassing revenue projections, expenditure allocations, policy announcements, and sectoral priorities. On the other hand, Vote on Account acts as an interim mechanism solely to guarantee uninterrupted funding for essential government expenditures until a new government assumes office and presents a complete budget.

While, the Interim Budget addresses all facets of fiscal planning, covering a wide range of elements such as revenue and expenditure. And, serves as a comprehensive financial blueprint for the interim period. The Vote on Account, in contrast, has a more limited scope. It primarily authorizes the government to withdraw funds for routine expenditures like salaries, pensions, debt servicing, and ongoing projects, without delving into broader fiscal policies.

At a legislative level, the Interim Budget undergoes parliamentary scrutiny and approval, akin to a regular budget, though its provisions are often less contentious and receive expedited approval to ensure the smooth functioning of the government during the interim period. Although the Vote on Account also undergoes parliamentary scrutiny and approval, typically through a streamlined process to expedite its passage and maintain continuity in government operations, it focuses on immediate and essential financial needs rather than an extensive fiscal plan.

What to Expect on February 1, 2024? 

During the transitional phase leading up to the formation of a new government, the outgoing government is restricted from proposing significant tax and economy-related policies to prevent undue influence on the electorate. Therefore, the taxpayers can expect a pragmatic and stability-focused approach in the upcoming budget 2024-25 that is to be presented on February 1, 2024.

The outgoing government can be expected to take measures, with a focus on sustaining ongoing projects, meeting essential expenses like salaries and pensions, and addressing immediate fiscal needs. While major tax and economic policy changes may be deferred until the new government takes charge, the Vote on Account will serve as a crucial mechanism to uphold financial stability during the transition period.

A full fledge budget for 2024-25 will be presented in July 2024 after the new government assumes office.

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