The Narendra Modi-led NDA government will present its first budget on July 10. The first budget session will begin from July 7 with Rail Budget being presented on July 8 and the prerequisite of General Budget, Economic Survey to be presented on July 9. The first General Budget by the Modi government will be presented by Union Minister of Finance Arun Jaitley.
For the outgoing government presenting the Budget months before it is to face the verdict of the people, the outgoing government passes a Vote on Account or (VoA) to ensure government machinery working continues without a break. The new incumbent has to pass the Budget before the VoA ends. The UPA-II government passed Interim Budget which ends on July 31.
Read below to know all about the VoA and annual Budget:
What is Interim Budget?
Vote On Account or Interim Budget is a temporary budget as its name suggests, passed by the departing government. The interim Budget includes reports of all the expenses incurred and incomes by the government in the previous financial year. The interim budget also includes the likely expenses to be incurred in coming few months till the new government takes over. There are no proposals of incomes in this interim budget but information on collection of taxes.
During the General Election year, the Interim Budget is passed couple of months before, in the pre-election period. The Model Code of Conduct put in by the Election Commission censures that there are no major lucrative policies initiated by the ruling government so as lure the vote share in its favour. The interim budget is presented in the Parliament and a Vote on Account procedure is initiated so as to seek the agreement. Once it is agreed upon, the mentioned expenses are then debited to the Consolidated Funds of India.
The Interim Budget and Vote of Account procedure is followed as it is not practically possible for an outgoing government to present a full budget as it may differ with the policies and strategies of the new government (after elections).
What is Annual budget?
On the other hand, Annual Budget is a budget which comprises of two parts. The first part mentions the incomes and expenses made in the previous financial year by the government, whereas the other part sees the new policies to be initiated by the new government in coming years in order to spend money on economic reforms and finding ways to raise money through taxes, keeping in mind the burden on ‘Aam Aadmi’.
The annual budget is generally presented in the Budget session of Parliament which begins in late February or early March. Once the budgetary speech is made by the Finance Minister in the Parliament, a month long debate ensues; eventually the financial bill is passed on approval.
Major difference between Interim Budget and Annual Budget?
As you may have got it by now, the major difference between VOA and Annual Budget is the time period. A Vote on Account is taken on the interim budget presented by the ruling government, whereas the Annual Budget is presented by the new government for the upcoming year.