VOTE-ON-ACCOUNT AND INTERIM BUDGET

THE CONCEPT of vote-on-account was introduced in the parliamentary process with a definite perspective. The financial year ends on March 31. It is therefore essential that all the stages of the debate on the budget presented to Parliament, including the general discussion, discussion on demands of grants of various Ministries, appropriation bill and finance bill are completed before March 31.
If discussion covering all the stages is not completed by March 31, no financial resources will be available for the expenditure of various Ministries in the next financial year. To prevent such an exigency, by way of abundant caution, a vote-on-account is introduced in Parliament sanctioning roughly one-third of the expenditure projected in the budget. Then, even if the discussion during all the stages of the debate is not completed and it spills over beyond March 31, on the basis of the amounts sanctioned by Parliament through the vote-on-account financial crisis is avoided. The convention is that such a vote-on-account is accepted in Parliament without division.
There is another situation under which vote-on-account becomes inevitable and inescapable; when the Lok Sabha is elected quite close to March 31, with hardly a few days left for the presentation and discussion of a full-fledged budget. Vote-on-account, popularly known as "interim budget," then becomes unavoidable.

Some facts on VOA in India

The first VOA in India was presented in the year 1952-53. Till date there have been 11 VOAs held in India, five by the outgoing government and six by the new government, as they did not have enough time to present a full annual budget.

Are a vote-on-account and an interim Budget the same?

No. While a vote-on-account deals only with the expenditure side of the government's budget, an interim Budget is a complete set of accounts, including both expenditure and receipts.

So what is a full Budget?

The Budget is a statement of the financial position of an administration for a definite period of time based on estimates of expenditures during the period and proposals for financing them. A full budget thus spells out both the manner in which the money is to be spent and how it is to be raised.

Why a vote-on-account and not an interim Budget?

A caretaker government typically opts for a vote-on-account, as it is regarded improper for an outgoing government to impose on its successor changes that may or may not be acceptable to the incoming government.

Can a caretaker government not present a full Budget?

Yes it can. Since the concept of 'caretaker government' does not exist in the Indian Constitution, legally there is no distinction between caretaker government and a normal one.
Technically, it is not necessary for a government to present a vote-on-account in an election year. But a full Budget just before the elections makes a mockery of the whole exercise.

Can the finance minister make policy statements while presenting the vote-on-account?

Barring any announcement on taxation, the finance minister's speech before seeking Parliament's approval of the vote-on-account can contain his intentions on economic policy.
When former finance minister Yashwant Sinha presented the vote-on account in 1991, he announced the Chandra Shekhar government's plan to divest government equity in public sector undertakings.

For how long can a vote-on-account be in force?

Normally, the vote-on-account is taken for two months only. But during election year or when it is anticipated that the main Demands and Appropriation Bill will take longer time than two months, the vote-on-account may be for a period extending two months.
Typically this period does not exceed six months, as that is the maximum gap possible between two sittings of the Parliament.
Normally a vote-on-account is in operation till the full Budget is passed.