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The Indian government publishes a Union Budget every year, outlining the financial plans for the year to come along with the economic agenda. However, this changes a little when there’s an election coming up in the same year. That's where the concept of an "interim budget" or "vote on account" comes in. They act as temporary financial bridges, keeping the government running until a full budget can be presented by the newly elected administration.

Interim budget – what it is and what it isn't

An interim budget, also known as a caretaker budget, is not a full-fledged budget. It only focuses on essential expenditures to keep the government functioning smoothly until the new government takes over. It includes covering routine expenses like salaries for government employees, pensions, and ongoing schemes.

Contrary to popular belief, an interim budget doesn't involve any new policy announcements or major changes in taxes or subsidies. These decisions are left to the newly elected government. Think of it as a stop-gap measure. The interim budget ensures that there is no disruption in essential services while waiting for a new roadmap.

Vote on account – the bridge within the bridge

Even within the interim budget framework, there is a crucial step called the "vote on account." It is a formal request by the government to the Parliament for approval to withdraw funds from the Consolidated Fund of India to cover expenses for a specific period, usually two months. Once approved, the government can start utilising those funds to keep things running smoothly.

Think of a vote on account as a temporary permission slip granted by Parliament. It allows the government to spend on essential needs until the full budget is presented. It's like building a bridge within the interim budget bridge, ensuring smooth financial flow until the permanent structure is constructed.

Key differences between a full budget and an interim budget

Understanding the differences between a full budget and an interim budget is crucial. Let us understand them better.

  • Scope: A full budget covers the entire financial year, outlining both income and expenditure, while an interim budget only focuses on essential expenditures for a limited period.
  • Policy announcements: A full budget can introduce new policies, schemes, and changes in taxes and subsidies. An interim budget doesn't involve any such announcements.
  • Duration: A full budget is valid for the whole year, while an interim budget typically covers only a few months.
  • Government: A full budget is presented by the elected government, reflecting its vision and priorities. An interim budget is presented by the outgoing government, primarily concerned with maintaining financial stability during the transition period.

Why do we need interim budgets anyway?

Interim budgets and votes on account serve two important purposes.

  • Ensuring Continuity: They prevent disruptions in essential government services and financial operations during the election period.
  • Maintaining Stability: They provide a period of financial stability and avoid hasty fiscal decisions before a new government is formed.

Limitations of interim budgets

While they play a crucial role, interim budgets also have limitations.

  • Limited Scope: They can only cover essential expenses, hindering investments and development initiatives.
  • Uncertainty: The absence of policy clarity can create uncertainty and dampen investor sentiment.
  • Short-term Focus: The short-term duration limits the scope for long-term planning and reforms.


Interim budgets and votes on account are temporary arrangements serving a specific purpose – bridging the gap between the outgoing and incoming administrations. While they have limitations, they ensure financial stability and continuity during election periods. Understanding their role and limitations helps us better appreciate the complexities of the Indian budget cycle and the unique challenges encountered during election years.

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