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Difference Between Interim And Union Budget
Before understanding the budget, you must know the difference between the interim budget and the union budget. Both are important for the nation's financial management, but they have different functions and are used in various contexts. This blog explores the difference between on what is Interim Budget and Union Budget.
What is Interim Budget?
An interim budget is a financial statement presented by the government when an election is imminent, and a new government is expected to take charge soon. The main purpose of the interim budget is to maintain financial stability during transitional periods.
Table of Content
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What is Interim Budget?
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What is the Union Budget?
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Key Difference Between Interim And Union Budget
What is the Union Budget?
The Union Budget is the comprehensive annual financial statement presented by the government, detailing its plans for revenue and expenditure for the entire fiscal year. It outlines the government’s fiscal priorities and economic policies.
Key Difference Between Interim And Union Budget
Here are the differences between the union budget and the interim budget:
| Aspect | Interim Budget | Union Budget |
| Timing | Presented before general elections or during a transition period with an interim government. | Presented by a government with a clear mandate and full-term tenure. |
| Duration | Covers immediate financial needs for a few months until a new government can present a full budget. | Encompasses the entire fiscal year (April 1 to March 31 of the following year). |
| Policy Direction | Focuses on maintaining the continuity of government policies and programs. | Sets new policies and financial allocations for the upcoming fiscal year in line with the government’s vision. |
| New Schemes/Projects | Usually avoid significant announcements to prevent commitments for the upcoming government. | Introduces new schemes, projects, and allocations for various sectors to drive economic growth. |
| Tax Changes | Generally, no significant changes in tax structure are introduced. | Includes proposals for changes in tax rates, exemptions, and fiscal measures to boost revenue. |
| Vote on Account | A provision for a Vote on Account is made for spending during the transition period. | A full budget is presented, including detailed estimates of revenue and expenditures, with parliamentary approval. |
| Parliament’s Role | Parliament’s approval is sought only for the Vote on Account. | Parliament debates and approves the Union Budget, and its proposals become law once passed. |
| Economic Survey | The Economic Survey is not usually presented with the Interim Budget. | Typically released a day before the Union Budget, providing an analysis of the economy’s performance and outlook. |
| Purpose | Serves as a temporary budget to meet essential expenses during transitional periods. | Forms the comprehensive financial plan for the fiscal year, outlining government’s revenue and expenditure. |
| Government’s Status | Often presented by a caretaker government during transitional periods. | Presented by a stable government with a full mandate to govern. |
| Importance | Essential for maintaining financial stability during transitional periods. | Paramount, outlining the government’s fiscal priorities and economic policies. |
| Long-term Planning | Lacks long-term planning as it is a stop-gap arrangement. | Includes provisions for long-term planning and the execution of government policies throughout the fiscal year. |
| Pre-election Populism | Often avoids major populist measures to prevent influencing election outcomes. | May include populist measures to appeal to the electorate, especially if presented close to elections. |
Conclusion
Overall, the Interim Budget and Union Budget play distinctive roles in India's financial landscape. While the Interim Budget serves as a temporary financial plan during transitional periods, the Union Budget is a comprehensive blueprint outlining the government's fiscal priorities and policies for the entire fiscal year. Understanding the difference between interim budget and union budget is crucial for investors, policymakers, and the public alike, as they navigate the intricate dynamics of India's economic trajectory.
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FAQs on the Difference between Interim Budget & Union Budget
What does an account budget vote mean?
The special provision known as "Vote on Account" allows the administration to ask Parliament for approval before taking any action to take money out when the budget for the upcoming fiscal year has not yet been announced.
What does a Lok Sabha vote on account mean?
The procedure by which an incumbent administration secures votes from Parliament to get funding from the Consolidated Fund of India is known as a vote on account.
What is meant by interim?
'Interim' denotes transitory or for the time being.
How does an Interim Budget's duration differ from a Union Budget?
An Interim Budget covers immediate financial needs for a few months until a new government is formed, while a Union Budget spans the entire fiscal year, typically from April 1 to March 31 of the following year.
Are there significant policy differences between an Interim Budget and a Union Budget?
Yes, there are. An Interim Budget focuses on maintaining the continuity of existing government policies, whereas a Union Budget sets new policies and financial allocations for the upcoming fiscal year, aligning with the government’s vision and priorities.
How do tax changes in an Interim Budget compare to those in a Union Budget?
Generally, an Interim Budget introduces no significant changes in the tax structure, while a Union Budget often includes proposals for changes in tax rates, exemptions, and other fiscal measures to boost revenue collection.
