Interim Budget 2024-25: A 'Vote-On-Account' Before The Actual Vote

In December 2023, Finance Minister Nirmala Sitharaman announced that the upcoming Budget will be a vote-on-account and there will be “no spectacular announcement” as the government “will be in election mode”. Budget 2024 will be presented as an interim budget on February 1. With Lok Sabha elections just a few months away, expectations are high to see what the government has to offer to its people and whether there will be any ‘freebie’ schemes to draw voters.

The last interim budget was presented in 2019, when Piyush Goyal, who held the additional charge of the Finance Ministry at the time, maintained the usual pattern of a low-key plan, with only two big-ticket announcements being the Income Tax rebate and PM Kisan Samman Nidhi Yojana Yojana, a farmer support scheme. These measures were announced as strategic responses to Opposition's attempts to woo the middle class disenchanted by demonetisation and GST, and Congress' promise of the social welfare cash scheme.

As the BJP appears confident to win a third consecutive term, it is no surprise that the finance minister played it cool and advised to wait and watch till a new government comes in. A full Budget will likely be tabled in July after the newly elected government takes charge. 

What is an interim budget and how is it different from a full Budget?

During an election year, the incumbent government cannot present a full Union Budget. Hence, an interim budget is announced with projections only for the upcoming three-to-four months instead of the whole fiscal year. However, to maintain ethics, the government usually does not make announcements that could burden the forthcoming government or present it with a fait accompli.

A vote-on-account, which the finance minister spoke about, is a provision within the interim budget that allows the government to obtain a Parliamentary approval for essential government spendings and ongoing expenses until a new government comes in. It is the process of withdrawing money from the Consolidated Fund of India during the period, usually two months, and is a formality that does not require a debate.

The law does not prescribe any rules for an interim budget to bar a government from making new announcements, but the pattern of past governments shows that most of them have held back on making major policy pronouncements before the polls, even if the election schedule has yet to announced or code of conduct has yet to come into force.

Expectations from 2024 interim budget

The finance minister does not need to make a statement with the interim budget this time as most of the poll predictions so far predict a clear majority for the BJP in Lok Sabha elections. Moreover, if the last 10 years of Prime Minister Narendra Modi’s government has taught anything, it is that the government is probably already prepared to tackle any fiscal obstacle it might face ahead of the general elections.

Take the example of onion exports. After a near crisis situation and skyrocketing onion prices in several parts of the country last year, the government banned onion exports till March 31, 2024, to increase domestic availability and keep prices in check. It can be seen as a calculated move to reduce chances of an outburst ahead of the big election. Expectations are that it may try to further meet the expectations of farmers with reduced taxes and additional support for farming and rural areas through capex.

Moreover, the BJP recently won a hat-trick in the recent state elections on “Modi currency” and a few masterstroke schemes, while the Opposition is still faltering to present a definitive ‘united’ authority to challenge the incumbent government. The Opposition is currently trying to push for a nationwide caste census, based on Nitish Kumar’s caste survey in Bihar but the ruling government has been countering this with its recent Dalit and Adivasi outreach in election campaigns and speeches. It is possible that the interim budget may also present something on similar lines.

The BJP has also orchestrated the dream positioning of India as ‘Vishwaguru’ and mobilised a huge majority of the Hindu population on the promise of Ram Mandir, which was inaugurated just in time for the elections. Amid this, issues like the ongoing ethnic clashes in Manipur and widening communal divide may have made a dent on the party’s image, but it has not been able to combat the popularity of the current leadership.

While experts have said that there may not be any major budget announcement, the anticipation also hopes for increased allocation to education, health and technology. A government hopeful of returning to power is likely to ensure that any enhancement in these direction does not affect their political ambitions.