HomeGreater Than Icon
Knowledge BaseGreater Than Icon
BudgetGreater Than Icon
What is Interim Budget?

What is Interim Budget?

An interim budget is submitted by a government in transition or its final year of power before the general elections. Traditionally, an incumbent government is unable to offer a comprehensive Union Budget during the election year. Instead, the Finance Minister proposes an interim budget at a joint session of the Rajya Sabha and Lok Sabha in Parliament.

With an Interim Budget, the current government asks for Parliament's consent to draw funds from the Consolidated Fund of India to cover budget costs before the end of the fiscal year, March 31, 2024. It is a customary activity that occurs in the run-up to each general election.

How does the Interim Budget Distinguish Itself from the Final Budget?

There are a few important differences between the two. It's critical to realize that a budget normally consists of two primary parts to better comprehend this, an assessment of the expenditures and revenue from the previous year and a forecast of the anticipated costs and revenue generation for the next year.

The first section of an interim budget, which deals with a retrospective study of income and expenses from the prior year, is still applicable to a final budget. But there's a big change to the second section, which lists projected costs and revenue for the upcoming year. This portion of an interim budget only includes necessary expenditures through the election.

The Electoral Commission's regulations serve as the foundation for this divergence. As per these restrictions, the current administration is not allowed to introduce significant policy changes, introduce new rules, or make adjustments that could unduly affect voting blocs during the Interim Budget term. To preserve an impartial and equitable electoral process, this precaution makes sure that the government doesn't make calculated decisions in the lead-up to the election that can influence public opinion.

Read more about current ipo

Start Your Stock Market
Journey Now!

50 Years Trust |₹0 AMC |₹0 Brokerage *

Table of Content

  1. How does the Interim Budget Distinguish Itself from the Final Budget?
  2. Key Aspects of an Interim Budget 

Key Aspects of an Interim Budget 

The following are some of the main elements of the interim budget:
 

  • Distribution of Spending: Generally, an interim budget sets aside money for continuing projects, any pressing requirements, and essential government activities. It stays away from implementing new laws or initiatives that might have a big financial impact.
  • Policy Restraints: Because an interim budget is only temporary, it does not carry out policy changes or reforms that require long-term planning or financial commitments. Up until a new administration assumes power, the major priority is preserving stability and continuity in governance.
  • Procedure for Approval: The temporary budget is not subject to the customary examination and discussion in the legislature. It is put up for a vote on account to obtain approval for necessary spending until a new government can provide a comprehensive budget.

Conclusion

The interim budget is an essential instrument for financial management since it helps to preserve continuity and stability by making sure the government can pay its bills until a new administration takes office. Anticipations are raised by the impending interim budget, which emphasizes fiscal consolidation and may include measures for farmers, highlighting the budget's importance in managing economic complexity.

FAQs on Interim Budget

The Interim Budget is usually presented before general elections or when there is a transition between governments. It is commonly delivered a few months before the completion of the government's term or in the absence of a full-term government.

The primary purpose of an Interim Budget is to meet the essential financial needs of the government during a transitional period. It ensures the continuity of government functions and essential expenses until a new government takes office and can present a comprehensive budget.

An Interim Budget typically focuses on maintaining continuity and stability rather than introducing new policy measures. It generally avoids major announcements or commitments that could influence the upcoming government's policy direction.

In general, an Interim Budget does not propose significant changes in the tax structure. It aims to maintain financial stability without introducing major fiscal adjustments. Any substantial changes in tax rates or exemptions are usually reserved for the full-fledged budget.

A Vote on Account is a provision made within an Interim Budget that grants the government permission to incur expenses during the transition period until a full budget is passed. It allows for the continuation of essential government functions without parliamentary approval for detailed expenditure estimates.

The key differences lie in the timing, duration, and policy direction. An Interim Budget is presented during a transitional period, covers immediate financial needs for a few months, and focuses on continuity. In contrast, a full Union Budget is presented for the entire fiscal year, introduces new policies, and outlines the government's comprehensive financial plan.