Interim Budget 2024: What political science students should know  

An interim budget, also known as a vote-on-account, is a financial statement presented by the government of a country during the transition period between the end of one fiscal year and the beginning of the next fiscal year. This budget is usually presented when the general elections are imminent or during a transition phase when a new government is expected to take office.   

An interim budget is crucial in maintaining the government’s financial stability during the transition period between the two elected governments. It is a temporary financial arrangement designed to meet the immediate fiscal requirements of the government until the newly elected government can present a comprehensive budget. This budget will ensure that essential government functions remain unaffected during the transition.  

What does an Interim Budget include?  

In addition to the standard budget, the Interim Budget provides a comprehensive breakdown of anticipated expenditures and tax revenues for the upcoming months until the new government assumes office. It typically offers a detailed documentation of every expense to be incurred and each rupee to be generated through taxes during this interim period.  

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Key features of an Interim budget that every political science student should know  

Temporary budget plan  

An interim budget is a temporary financial plan that helps in meeting the government’s expenditure needs for a short period until a full-fledged budget is presented by the newly formed government.  

No major policy changes  

This budget typically refrains from introducing significant policy changes or new long-term initiatives. It focuses on maintaining the status quo and ensuring the continuity of essential government operations.  

Financial stability during transition   

In a parliamentary democracy such as India, the general elections occur usually every five years. Following these elections, a transitional phase ensues, during which a new government is formed. Within this transitional period, there is a necessity for a financial strategy that will guarantee a seamless continuation of vital government operations and services.  

Expenditure for the transition period 

The interim budget usually covers the government’s expenditures for the initial months of the fiscal year. In India, the fiscal year is from April 1st to March 31st. Therefore, the interim budget is crucial to ensure that government activities and services are not disrupted during the first few months of the new fiscal year.  

 Financial coverage for essential services 

The interim budget prioritizes funding for essential services such as healthcare, education, defense, and infrastructure. It ensures that salaries of government employees, ongoing projects, and day-to-day operations can continue without interruption.  

 Approval through Vote on Account   

An interim budget’s main objective is to get parliamentary approval for government expenditure during the transitional period. It allows the government to withdraw funds for essential activities and services. The term “vote on account” essentially means seeking parliamentary approval for government expenditure without presenting the full budget.  

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Interim Budget in India 2024 

The Interim budget in India for the financial year 2024 was presented by India’s Finance Minister, Nirmala Sitharaman, on Thursday, February 1. It was announced in a joint session of Parliament, with the comprehensive financial budget anticipated after the upcoming general elections, slated for April and May this year.  

Key announcements of the budget were focused on the empowerment of four main pillars of the Indian economy – poor, youth, women empowerment, and farmers while maintaining fiscal consolidation and continuing capital expenditure. The budget includes allocations for various sectors ranging from healthcare, technology, railways, tourism, aviation to green energy, dairy, housing, and more.

It reiterates the commitment to transform India into an economic powerhouse that draws power by skilling and reskilling the nation’s youth through continued investments in initiatives such as the Skill India Movement. Also, efforts to increase the representation of women in the workforce and foster an entrepreneurial spirit in them to make India an inclusive and independent hub of innovation are reassuring as an ed-tech leader. Let us take a look at some of the key highlights of the Interim budget. 

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Highlights of the Interim Budget 

• Fiscal deficit: The fiscal deficit for the FY24 is at 5.8% of GDP while the target for the FY25 is reduced to 5.1% of GDP. 
• Capital expenditure: The budget provides provisions for a capital expenditure of ₹11.11 lakh crore while keeping the fiscal deficit in check. 
• Tax rates: No changes were made to the direct or indirect tax rates. 
• Healthcare insurance: The healthcare coverage under Ayushman Bharat scheme to be extended to all ASHA and Anganwadi workers. 
• Housing development: The government will soon launch a scheme that offers financial aid to middle-class people living in slums, rented houses, and unauthorized colonies to build or buy new homes. 
• Agriculture sector: To accelerate the expansion of the agriculture sector and enhance the income opportunities for farmers, the government will encourage both private and public investments in post-harvest activities like aggregation, modern storage, streamlined supply chains, primary and secondary processing, as well as marketing and branding efforts. 
• Development of states: The proposal to provide INR 75k crore at 50-year interest free loan for the development of states under the Gati Shakti master plan will continue for one more year. 
• Railway sector: Expansion of rail infrastructure projects including Metro Rail and Namo Bharat to more cities. Convert around 40,000 rail bogies to Vande Bharat coaches. 

What’s in it for students and aspiring entrepreneurs? 

The finance minister stated that this will be a golden era for tech-savvy students. To encourage research and innovation in sunrise industries, the government will establish a corpus fund of INR one lakh crore through which it provides 50-year interest-free loans to startups and other MSMEs. She emphasized the transformative impact of new-age technologies and data on lives and businesses worldwide, enhancing efficiency and fostering innovation. India’s innovation and entrepreneurship are gaining widespread global recognition, offering solutions to contemporary challenges. 

She said that the Skill India Mission has helped boost employability of youth and making Indians ready for more modern employment opportunities. With the help of 3,000 new Industrial Training Institutes, the Skill India mission has trained 1.4 Cr youth, and upskilled 54 Lakh Indians. 

For the year 2024-2025 the government is expected its allocation for the PM-SHRI scheme to boost development of schools and curriculum as envisaged by the National Education Policy 2020 to INR 6,050 Cr, from INR 4,000 Cr last year. 

Conclusion  

An interim budget is usually presented when there is limited time before the end of the fiscal year or when the political environment suggests the possibility of a change in government. This allows the outgoing government to fulfill its financial obligations and keep essential services running.  

It’s important to note that the interim budget does not provide a detailed roadmap for the government’s economic policies. Once the new government is in place, it is expected to present a full budget that outlines its fiscal policies, revenue generation plans, and expenditure allocations for the entire fiscal year.  

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