Difference Between Union Budget and Interim Budget

July 12, 2024
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Difference Between Union Budget and Interim Budget

Difference Between Union Budget and Interim Budget

July 12, 2024

Registrationwala

Both the Union Budget and Interim Budget are presented by the Finance Minister (FM) of the Republic of India. On 1st February 2024, the Interim Budget was presented by FM Smt. Nirmala Sitharaman. Now, everyone is looking forward to the Union Budget which will be presented by FM on 23rd July, 2024.

While all of us often hear the terms ‘Union Budget’ and ‘Interim Budget’, many of us may not have a full clarity regarding them and the difference between them. Being a citizen of India, it is extremely important to know the difference between Union Budget and Interim Budget presented by the Government of India.

What is the Union Budget?

The Union Budget of India is an estimation of revenue and expenditure of the Central government during a financial year. It also provides the necessary framework for the government to introduce policies and reforms for the benefit of the common taxpayers.

The Union Budget is set by the Ministry of Finance and presented by the Finance Minister every year. Union Budget is also known as the Annual Financial Statement under Article 112 of the Indian Constitution. The term Union Budget gained prominence as India is a Union of States. The term Budget originated from Bougette, which is a French word meaning leather briefcase. When Smt. Sitharaman presented her first Budget in 2019, she drew the nation’s attention by replacing the budget briefcase with a red-coloured ‘bahi khata’.

The Government of India presents the Union Budget on the first day of February so that it can implement it before the start of the new fiscal year in April. Until 2006, the Union Budget used to be presented on the last working day of February every year. Former Finance Minister Shri. Arun Jaitley explained that the shift to February 1 was aimed at breaking away from the colonial-era practice of 92 years. Moreover, presenting the budget at the end of February left the Government of India with minimal time to prepare for new policies and changes slated to take effect from April 1.

Smt. Sitharaman will present the Union Budget on 23rd July, 2024, since she has been reappointed to her position as Finance Minister. Smt. Sitharaman will present her seventh consecutive budget in a row and become a "Record Holder" by surpassing the record of six consecutive budgets held by former Prime Minister Shri. Morarji Desai.

Key Elements of Union Budget

The following are the key elements of a Union Budget:

Plans and Policy Initiatives: To support economic growth, social development, and overall advancement, the Union Budget introduces new plans, policies, programs, and reforms.
Government Revenue and Expenditure: The Union Budget outlines estimated government revenue sources, such as taxes, duties, and other sources of income, as well as projected spending on infrastructure, defense, healthcare, education, and other areas.
Scrutiny by Parliament: Unlike the interim budget, the Union budget is thoroughly reviewed, debated, and approved by both houses of Parliament. It includes discussions on a range of budgetary topics and allows for thorough examination and potential revisions prior to approval.

What is the Interim Budget?

A temporary financial plan known as an interim budget is proposed by the current administration in advance of the general elections. It acts as a stopgap measure to cover the government's spending needs for three to four months while a new administration works to create and deliver a complete budget. Major policy pronouncements that could financially strain the incoming government presenting the full Union Budget not made in an interim budget.

The current government proposes the Interim Budget as a temporary measure prior to elections. It only addresses spending and is approved without discussion. In order to pay for its expenses until a new government takes office, the government is permitted by this budget to take money out of the Consolidated Fund of India. Major policy measures or tax structure changes are generally not contained in an Interim Budget.

Key Elements of Interim Budget

The following are the key elements of Interim Budget:

Fund Allocation: Interim Budget allocates funds which are crucial for essential government operations, current projects/schemes and any urgent needs.
Void of Major Policy Changes: An interim budget doesn’t propose policy changes or reforms that call for long-term planning or financial commitments due to its temporary nature. Up until a new government takes control, the emphasis continues to be on preserving continuity and stability in the political system.
Approval Process: The temporary budget is not subject to the customary examination and discussion in the legislature. It is presented for a vote on account in order to approve the required spending.

Difference between Union Budget and Interim Budget

The key differences between the Union Budget and Interim Budget are represented in the table below:

Union Budget	Interim Budget
The Union Budget refers to an Annual Budget presented in the Parliament by the Finance Minister of the Central Government.	The Interim Budget refers to a budget presented by the Finance Minister of the Central Government in the Parliament a few months before General Elections.
The Union Budget provides a detailed breakdown of the previous year’s income and expenses.	The previous year's income and expenses are summarized in the interim budget.
The Union Budget is divided into two parts: the first part deals with the previous year's income and expenses, and the second part outlines the government's intention to raise money through a variety of measures and how it will be used for the country's growth.	The previous year's revenue and expenses is included in the Interim Budget. Additionally, it notes the costs for a few months until the new government assumes responsibility. Generally, the Interim Budget does not include a full breakdown of the revenue sources.
The Union Budget gets approved after extensive discussions in the Lok Sabha.	Vote on account is passed in case of Interim Budget without any discussion in Lok Sabha
The Union Budget is presented for the whole financial year.	The Interim Budget is presented during the election year, for a few months ahead of the General Elections.
The Union Budget outlines how money will be raised through taxes and how it will be spent on various social welfare programs for national development.	The Interim Budget does not include the component of income through tax collection.

Why does India have Two Budgets in 2024?

This year, India has two budgets. This is due to the recent general elections that took place. The interim budget which was presented by the Central Government was a temporary measure to make sure that it received continuous government funding till a new government assumed power. The newly elected government will soon deliver the Union Budget, which includes the comprehensive financial plan for the fiscal year along with details on spending, income, and economic strategies.

What Announcements were made in the Interim Budget 2024?

In the Interim Budget 2024, the following major announcements were made:

Additional 2 crore homes under Pradhan Mantri Awas Yojana
Housing for Middle Class
30 crore loans under Mudra Yojana provided to women entrepreneurs.
Extension of Healthcare cover to all ASHA workers, Anganwadi Workers and Helpers under Ayushman Bharat scheme.
Rooftop solar power generation and free electricity up to 300 units
Empowering MSME to grow and compete on a global scale.
Focus on the Eastern region of the country, including Bihar, Odisha, Jharkhand, West Bengal and Chhattisgarh.
Three major corridors which are programs for railways + 40,000 rail bogies to be converted to the standards of Vande Bharat
1 lakh crore funds for Research and Innovation
Deep-tech technologies for defense and expediting ‘atmanirbharta’
Boost for tourism sector

Conclusion

The difference between union budget and interim budget lies in their purpose and duration. An interim budget is a temporary measure which is taken by the government to meet its funding requirements, before the general elections. However, a union budget is a full-fledged budget which is meant for the whole financial year. Both the interim budget and union budget are crucial for our country. Through these budgets, we get to learn how the Central Government plans to spend their funds, and what has been achieved by them so far.

FAQs About Union Budget and Interim Budget

Q1. How are Union Budget and Interim Budget different from each other?

A. Union Budget is an annual budget announced by the Central Government for the entire financial year. Interim budget, on the other hand, is announced by the Central Government as a temporary measure before the general elections for generally 2-4 months.

Q2. Why is the Union Budget being presented on July 23 instead of February 1 this year?

A. Because the general elections took place this year and the interim budget had been already presented on February 1, the Union Budget 2024 is being presented on July 23, 2024.

Q3. Why is a budget of importance for the Government?

A. Through a budget, the government can regulate taxation across various sectors. The key factors that contribute to economic development of the nation are investment and expenditure. By providing tax rebates and subsidies while presenting a budget, the government motivates the citizens to focus more on saving and investing.

Q4. Which body is responsible for producing the budget?

The budget division of the Department of economic affairs (DEA) of the Ministry of Finance is the nodal body responsible for producing the budget.

Q5. Till which date is the Union Budget valid?

A. The Union Budget or Full Budget remains valid until the end of the financial year, March 31.

Q6. Who presented the first Union Budget of Independent India?

A. Former Finance Minister RK Shanmukham Chetty presented the first Union Budget of independent India on 26th November in 1947. He served as the first Finance Minister of independent India between 1947 to 1949.