In the Indian context, there are two separate financial exercises: the Union Budget and the Interim Budget. Usually released in February, the Union Budget is the government’s complete yearly financial statement outlining its earnings and expenses for the next fiscal year. In contrast, the government releases an interim budget, which is a short-term financial plan, few months prior to the general elections, in an election year.
Meeting the government’s spending needs until a new administration is formed after the election is the main goal of the interim budget. Seeking Parliament’s permission for necessary government spending during the first a few weeks of the fiscal year, it is regarded as a vote-on-account. Major policy choices are postponed until the new administration presents the full budget, which does not include any new policy proposals.
The Interim Budget, in contrast to the complete Union Budget, does not propose any new programmes or significant policy changes in favour of preserving the continuity of government operations. It mostly takes care of regular costs and makes sure the government can continue operating normally until the next government assumes power. Following the elections, the newly elected administration will have the power to alter or propose a new budget that is in line with its top priorities.
The timing and the extent of policy decisions are where the two budgets differ most, despite the fact that they are both presented similarly and include detailed forecasts of revenue and expenses. The Interim Budget is a stopgap measure to keep the government running until a new administration can propose its full budget, whereas the Union Budget is the comprehensive financial plan for the fiscal year. Gaining an understanding of these differences is essential to comprehending the dynamics of financial management in India during election years.