What is interim budget? 4 crucial points you need to know

What is interim budget? 4 crucial points you need to know


The parliament has to vote in order to sanction the outgoing government’s request to withdraw money from the Consolidated Fund of India. The money is used by the government to fund salaries and towards its other politics. 

What is interim budget

The interim budget will be passed by Finance Minister Arun Jaitley on February 1. (Photo: PTI)

HIGHLIGHTS

  • It is a temporary measure which occurs in the run-up to every general election.
  • The Parliament approves the outgoing government’s budget and gives it spending rights till the end of the financial year
  • By approving the interim budget, the Parliament passes a vote on account to help the government meet administration expenses till the next full budget

With just a few months remaining before the NDA government’s term formally comes to an end, Finance Minister Arun Jaitley is all set to announce the interim budget of the government on February 1, 2019.

A government which is in the last year of its tenure usually presents an interim budget or obtains a vote on account a process where an incumbent government seeks a vote from the Parliament to draw money from the Consolidated Fund of India to meet its budget expenses till the Lok Sabha elections are over.

It is a temporary measure which occurs in the run-up to every general election.

The parliament has to vote in order to sanction the outgoing government’s request to withdraw money from the Consolidated Fund of India. The money is used by the government to fund salaries and towards its other politics.

Interim budget explained

An interim budget is passed by an outgoing government on February 1. As customary, an interim budget is passed in two conditions: If the government of the day does not have time to present a full budget or if general elections are nearby. The full budget is then presented by the incoming government.

What’s the procedure?

Simple. The Parliament approves the outgoing government’s budget and gives it spending rights till the end of the financial year i.e. March 31.

By approving the interim budget, the Parliament passes a vote on account to help the government meet administration expenses until a full budget is passed by the incoming government.

In years when general elections are held, the vote on account is approved for a period of four months. Elections are due in May 2019.

Difference between interim and full budget

Not much. An interim budget is exactly similar to a full budget but the vote on account is usually approved for a part of the financial year.

The interim budget estimates are presented for the full year but the incoming government can completely give the budget a makeover or partially change it after coming to power.

Interim budget regulations

There is no hard and fast rule which stops the outgoing government from framing any new major policies or benefits and there have been no major policies introduced all interim budgets held before elections years.

While it has been reported that the Narendra Modi-led NDA government is planning to increase the income tax exemption threshold, it remains to be seen whether the government changes the age-old tradition of not introducing major ticket reforms.

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