In a year marked by Lok Sabha elections, the central government releases an interim Budget instead of a regular Union Budget.
And the upcoming Budget to be presented by Finance Minister Nirmala Sitharaman on February 1, 2024 will be an interim Budget with the general elections expected to be held between March and May in 2024. An outgoing government presents only an interim Budget or seeks a vote on account, and leaves it to the next government to present the full Budget.
The Constitution says that no money can be withdrawn by the government from the Consolidated Fund of India except under appropriation made by law. And for this, an appropriation bill is passed during the Budget process which may take time to pass through he Parliament and become a law. Meanwhile, the government would require permission to spend money from April 1 when the new financial year starts. Vote on Account is that permission which the government seeks to withdraw money from the Consolidated Fund of India, during that period, which usually is two months. Essentially, vote on account is the interim permission of the parliament to the government to spend money, as against the full Budget which is an elaborate financial statement of expenditure and receipts including changes in taxes and government policies.
So, what really is Vote on Account and how is it different from the interim Budget?
As defined by Article 116 of the Indian Constitution, a vote on account is an advance grant to the government from the Consolidated Fund of India to cover short-term expenditure requirements until the new financial year begins.
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The Consolidated Fund of India, defined in Article 266 of the Constitution, stores all the revenue generated by the central government, and this includes taxes, interest on loans, and a portion of state taxes. It may not be withdrawn except under an appropriation undertaken by law and approved by the Centre each year during the Union Budget.
Vote on Account is the estimated expenditure that covers the expenses that are required before a new government takes charge. Similar to the fiscal document present in a regular budget year, it must receive the nod of the majority in the Parliament. A vote on account is merely an interim authorization to spend money, as opposed to a full Budget that includes details of expenditures and receipts, including tax changes and government policies.
While its very common to confuse the interim Budget and Vote on Account and to also use both the terms interchangeably, there are fundamental differences between the two. One major difference is that Vote on Account can’t impact the tax regime, whereas the interim Budget can change it. Also, an interim Budget consists of both expenditures and receipts whereas a vote on account lists only the expenditure borne by the government.
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An interim Budget has to be discussed in the Lok Sabha and then passed, and the vote on account deals specifically with expenditure and is passed by the Lok Sabha without any discussion. An interim Budget is similar to a full budget but only has projections for a few months whereas the vote on account can be passed through the interim budget. An interim Budget is valid for an entire year on the other hand a vote on account is usually valid for 2 months.
