Comments
February is an action-packed month for investors – from the presentation of the Railway Budget to the Economic Survey and culminating in the Budget.
Every year, in the run up to the Union Budget, there’s a frenzy and excitement that grips everyone from big-wig economists to the aam aadmi .
Even before you get a whiff of the Budget proposals, expert opinions are all over the place. But this year is likely to be different.
With the country set for general elections in April-May, what’ll come in February is only an interim Budget, or a Vote-on-Account (VoA).
The UPA Government will table the VoA for fiscal 2014-15 during the fortnight-long parliamentary session to be held in February.
A full-fledged Budget will be presented only once the new Government is sworn in post the elections. The Economic Survey for 2013-14, too, will be presented sometime before the final Budget.
Budget vs VoA Similar to a Budget, a VoA presents an update – revised estimates of revenue, expenses and deficit – for the fiscal year gone-by, as well as estimates for the incoming year.
But, it differs from the Budget in one important aspect.
While the objective of the Budget is to seek parliamentary approval for the Government’s proposed spending for the incoming fiscal and money-raising plans, a VoA is primarily about getting the legislature’s nod for the expenditure to be incurred in the next few months.
Nonetheless, in the past, even as Governments have refrained from tweaking direct (income and corporate) taxes, indirect (excise and customs) tax proposals have been announced in the interim Budget. But a Government mostly stays clear of announcing any major changes.
Take for instance, the last interim budget, for 2009-10, presented by the then Finance Minister Pranab Mukherjee, which was a non-event.
Apart from announcing sizeable increases in allocations toward some social sector schemes, the Finance Minister stayed clear of any big bang measures, in line with the spirit of an interim Budget.
In fact, expectations that some measures would be announced for the ailing infrastructure sector, too, were belied.
If the party in power is allowed to table a usual Budget covering the entire fiscal year, it will undoubtedly announce populist measures simply to boost its electoral prospects.
Why a Vote-on-Account Therefore, as a convention, only an interim budget is presented prior to an election.
Not just that, propriety demands that the Budget be tabled by the Government that will be in existence in the fiscal year during which the revenue and expenditure measures proposed will be applicable.
It’s another matter that nothing stops the incumbent Finance Minister from announcing what the Government intends to do – launch new schemes, reduce taxes and so on – if it is voted back to power.
That these promises ought not to be taken too seriously, given that it is the final Budget proposals that will be material, goes without saying.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.