Interim Budget vs Union Budget : Know difference between them here !

Safalta expert Published by: Gitika Jangir Updated Wed, 11 May 2022 10:41 PM IST

Highlights

Clear all your queries related to Interim Budget vs Union Budget here with Safalta. Get to know the differences between Interim Budget vs Union Budget and important questions related to it.

The differences between the Interim Budget and the Union Budget are detailed here. From the standpoint of the Indian Polity Syllabus, this topic is critical. There is no provision in the Constitution for the Interim Budget to be presented. Advocate Manohar Lal Sharma filed a suit before the Supreme Court in 2019 to overturn the Interim Budget. The Union Budget covers the entire year, while the interim budget covers a few months until a new Central Government takes office. The distinction between Interim and Union Budgets provided here can assist UPSC Civil Service test candidates in better understanding the fundamentals and understanding their parallels.
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Difference between Interim Budget and Union Budget

The major differences between the Interim Budget and Union Budget are:

Interim Budget Union Budget
Interim Budget is a budget presented by the Central Government just before the General elections. Union Budget is an annual budget presented by the Central Government in the Parliament. 
Vote on the account is passed without discussion in Lok Sabha Union Budget is passed after complete discussions in Lok Sabha
In the Interim Budget, the income and expenses of the previous year will be mentioned. It also mentions the expenses for a few months till the charge is taken over by the next Government. However, most importantly the sources of income will not be detailed in the Interim Budget. The Union Budget has 2 different parts, one part is related to the expenses and income of the previous year and the other part is the plan of the Government to raise funds through taking various measures and how it would be utilised for the development of the nation.
Interim Budget is during the election year, for a duration of approximately 2 to 4 months of the fiscal year Union Budget is for the entire fiscal year.
The Interim Budget has only a summary of the expenses and income of the previous year. Union Budget will have Income and expenses of the previous year would be provided in detail.
The Interim Budget will not have the component of income through the collection of taxes. The Union Budget will have a component on spending funds for various social welfare measures for the development of a country and describe the ways of raising funds through taxes. 
 

Interim Budget :

In the next months, until the new administration takes office, the Interim Budget comprises precise documentation of every item to be made and every rupee to be earned through taxes. During the transition period, the ruling government need Parliament's permission to withdraw funds from the Consolidated Fund of India, which holds all of the government's funds. It is impractical for the ruling administration to release a regular Annual Budget when an election is approaching. As a result, it is passed as an Interim Budget, which includes complete income and expenditure forecasts as well as some policy actions.

When is interim budget applicable?

The ruling government normally presents an interim budget before the General Lok Sabha Elections, which take place every five years. This provisional Budget, like every Union Budget, will provide a progress report card on the expenses and income earned in the previous year. 
In the future, it can simply make suggestions for possible spending in the months preceding up to the election (which should not be more than 6 months). The ruling government rarely announces big tax reforms that would place a financial burden on the future administration. In the following months of their mandate, they must exercise extreme caution in terms of expenditure and income collection. Any major policy changes or tax reforms may or may not benefit the government in the future elections

Union Budget :

According to Article 112 of the Indian Constitution, the annual Union Budget, also known as the annual financial statement, is a declaration of the government's expected receipts and expenditures for that year.

Union Budget 2019-20 emphasised on the points given :

  1. It focus on Agriculture and Rural economy.
  2. GDP growth pegged at 7.6 percent.
  3. It focus on cutting plan expenditure to control fiscal deficity is not a good sign.
  4. It emphasis on rural economy is a positive step, as history has shown us that it was a rural economy that insulated India from the recession of 2009.
Also check , Important Economic terms related to Union Budget

 

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What is Union Budget ?

According to Article 112 of the Indian Constitution, the annual Union Budget, also known as the annual financial statement, is a declaration of the government's expected receipts and expenditures for that year.

Who decides on the Union Budget?

The Central Government decides the Union Budget. It is announced in the Parliament by the Finance Minister of the country.

How is Interim Budget different from the Final Budget?

 In many aspects, an interim budget differs from an annual budget. As previously said, a budget is divided into two sections: the previous year's spending and income report, and the proposed expenses and income generation for the following year. The initial section of the interim budget will remain unchanged. However, before the election, the second half will only contain proof of minimal expenses. According to the Electoral Commission Regulations, the incumbent administration is not authorised to make any major policy changes, new rules, or amendments that could adversely impact vote banks

How is Interim Budget passed ?

Vote on the account is passed without discussion in Lok Sabha

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