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Union Budget vs Interim Budget: Key Differences and Implications for 2024 Elections

As the finance minister, Nirmala Sitharaman, prepares to announce the interim budget on February 1, the focus has shifted to understanding the differences between the Union Budget and the Interim Budget, especially during an election year. The Union Budget is presented annually by the Central Government in Parliament and undergoes comprehensive discussions in the Lok Sabha. It covers the income and expenses of the previous year and outlines the government’s plan for fund allocation and utilization for national development. On the other hand, the Interim Budget surfaces just before general elections and typically lasts for a brief period within the fiscal year, focusing on essential expenditures for a short period. It’s crucial to note that the Interim Budget lacks detailed information on income sources, especially through tax collection.

The primary distinction between the two budgets lies in the duration and depth of coverage. While the Union Budget spans the entire fiscal year, detailing income sources and extensive expenses, the Interim Budget is a concise overview with a focus on a limited period. Additionally, the Union Budget involves thorough discussions and approval in Lok Sabha, whereas the Interim Budget’s passage is through a vote on account without in-depth deliberations. Finance Minister Nirmala Sitharaman has labeled the upcoming budget as a “vote-on-account” rather than an Interim Budget, emphasizing the focus on essential expenditures for a short period. This approach allows the outgoing government to draw funds from the Consolidated Fund of India for a few months until the new government presents a comprehensive budget.

Opinions on the topic are divided, with some experts suggesting that the upcoming budget should focus on essential expenditures and avoid major tax and economy-related policies, in line with the Election Commission’s code of conduct. Taxpayers are likely to witness substantial announcements only after the new government takes charge in July. As the distinction between Union and Interim Budgets becomes crucial, the upcoming presentation is expected to set the stage for a full-fledged budget in July 2024 after the general elections.

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