Interim Budget-India

The government of the day presents an interim budget if it does not have the time to present a full Budget or because national elections may be near. In the latter situation, propriety demands that the task of framing the full Budget be left to the incoming government. 

Why is an interim budget needed?
The budget for the year approved by Parliament gives the government spending rights only till the end of the financial year ending March 31. If for any reason the government is not able to present a full budget before the financial year ends, it will need parliamentary authority for incurring expenditure in the new fiscal year until a full Budget is presented. Through the interim Budget, Parliament passes a vote-on-account that allows the government to meet the expenses of the administration until the new Parliament considers and passes the Budget for the whole year. In an election situation, the vote-on-account is  is usually for a four-month period. 

Interim budget Vs Regular budget
In an interim Budget, the vote-on-account seeks parliament’s nod for incurring expenditure for part of a fiscal year. However, the estimates are presented for the entire year, as is the case with the regular Budget. However, the incoming government has full freedom to change the estimates completely when the final Budget is presented.  

Constitutionally, the government can make tax changes in the interim budget. However, the 12 interim budgets since Independence have respected the fact that the government is a custodian for a few months and have refrained from announcing big-ticket changes or new schemes 

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