In India, the “Interim Budget” is a special type of budget presented by the government when general elections are approaching or other circumstances prevent the presentation of a full budget. It serves as a temporary financial arrangement that allows the government to continue its operations and meet its financial obligations until a new government is formed and a full budget can be presented.
Meaning and Purpose
1. Definition:
Interim Budget: An Interim Budget is a provisional financial statement presented by the government to cover the period between the end of the current fiscal year and the formation of a new government. It is typically presented when general elections are imminent, and the full budget cannot be finalized before the new fiscal year starts.
2. Purpose:
- Continuation of Government Functions: Ensures that government operations and services continue without interruption.
- Financial Planning: Provides a temporary financial plan that covers essential expenditures until the new government can present a full budget.
- Legislative Requirements: Meets the legal requirement for parliamentary approval of government expenditures for the upcoming fiscal year.
Features of the Interim Budget
1. Provisional Estimates:
Definition: The Interim Budget includes provisional estimates of revenue and expenditure for the upcoming fiscal year.
Features:
- Limited Scope: Focuses on essential spending and key policies, rather than detailed long-term plans.
- Continuation of Existing Programs: Maintains existing programs and services without major new proposals.
Example:
- Interim Budget 2019: Presented by the then Finance Minister Arun Jaitley before the 2019 general elections, it included provisional estimates for key areas like subsidies, salaries, and infrastructure.
2. Vote on Account:
Definition: The Interim Budget typically includes a Vote on Account, which authorizes the government to spend a certain amount for the initial months of the new fiscal year.
Features:
- Authorization: Provides legal authority to withdraw funds from the Consolidated Fund of India for essential expenditures.
- Short-Term Measure: Covers expenditure until the full budget is presented and approved.
Example:
- Vote on Account 2019: The interim budget included a Vote on Account allowing the government to spend a certain amount to cover essential expenditures until the new budget was passed.
3. No Major Policy Changes:
Definition: The Interim Budget usually does not include significant new policies or major fiscal reforms.
Features:
- Stability: Focuses on maintaining financial stability and continuity rather than introducing new initiatives.
- Caretaker Nature: Acts as a caretaker budget that preserves the status quo.
Example:
- Interim Budget 2014: Presented before the 2014 general elections, it did not include major new policies but focused on ensuring continuity in government operations.
4. Approval Process:
Definition: The Interim Budget is presented and approved by Parliament in the same manner as a full budget, but its scope is limited.
Process:
- Presentation: The Finance Minister presents the Interim Budget to Parliament.
- Debate and Approval: Parliament debates and approves the Interim Budget, including the Vote on Account.
Example:
- Approval of Interim Budget 2019: The Interim Budget was debated and approved by both houses of Parliament, allowing the government to function until the new budget was presented by the incoming government.
Example of Interim Budget
Context: In early 2019, India was preparing for general elections scheduled for April-May. The then government needed to ensure that essential government functions and services continued seamlessly into the new fiscal year starting April 1, 2019.
Example:
- Interim Budget 2019 Presentation:
- Finance Minister: Arun Jaitley presented the Interim Budget in February 2019.
- Scope: Included provisional estimates for key expenditures like subsidies, defense, and social programs.
- Vote on Account: Approved for the initial months of FY 2019-20 to cover essential expenses.
- Content:
- Expenditure Estimates: Provisionally estimated expenditures for ongoing programs and services.
- No Major Reforms: Focused on continuity and stability rather than introducing new policies.
- Approval:
- Debate: The budget was debated in Parliament, reviewed by committees, and passed.
- Implementation: Allowed the government to continue operations and manage finances until the new government took office and presented a full budget.
Summary Table
| Component | Description | Example |
| Definition | Provisional budget presented before general elections. | Interim Budget 2019. |
| Purpose | Ensures continuity of government operations. | Covers essential spending until a full budget is presented. |
| Provisional Estimates | Estimates of revenue and expenditure for a short period. | Includes estimates for subsidies, salaries, and ongoing programs. |
| Vote on Account | Temporary authorization for government spending. | Vote on Account included in the Interim Budget 2019. |
| No Major Policy Changes | Focuses on continuity rather than new policies. | Interim Budget 2014 did not introduce major new policies. |
| Approval Process | Presented and approved by Parliament like a full budget. | Debate and approval in Parliament for Interim Budget 2019. |
Conclusion
The Interim Budget is a critical financial tool used in India to manage government operations and expenditures when a new fiscal year begins amidst pending general elections. It provides provisional financial estimates and authorizes essential spending through a Vote on Account, ensuring that government functions continue smoothly until a full budget is presented by the new government. The Interim Budget plays a vital role in maintaining financial stability and continuity during transitional periods.
