India’s democratic system does not allow any unauthorised withdrawals from the Consolidated Fund of India by the Union government. The consolidated fund is the primary fiscal fund that contains the country’s corpus. A unique method of gaining the said authorisation is a parliamentary procedure called vote-on-account.
What is a Vote-on-account?
Article 116 of the Indian Constitution mentions three methods of getting withdrawals approved if the annual union budget is not passed. They are
- Vote-on-account
- Vote-of-credit
- Exceptional grants.
Vote-on-account means a parliamentary procedure that enables the Indian state to withdraw funds from the Consolidated Fund of India for a short period.
Key points about the vote-on-account budget:
- It provides a temporary source of finance for the government.
- It allows funding for a part of the financial year until the full budget is passed.
- It can also be used to address exceptional or unforeseen expenses.
When is a vote-on-account used?
The government cannot withdraw funds without passing a law with the approval of the parliament. The government makes withdrawals from the consolidated fund of India usually after the annual union budget is passed.
However, sometimes the government cannot pass a union budget to fund its expenses. In such a situation, a vote-on-account can be used.
For instance, before general elections, the government tends to use a vote-on-account.
The country elects a new government through the general elections. The outgoing government uses a vote-to-account so that the new government can formulate the budget as per its policy.
Difference between Vote-on-account and Union Budget?
The table below highlights the differences between the union budget and vote-on-account.
| Parameter | Union Budget | Vote-on-account |
| Tenure | It is passed for the entire financial year. | It encompasses only a portion of the fiscal year. |
| Passed by | It is presented by an incumbent government that is assumed to remain in office for the entirety of the financial year. | An outgoing government uses this to authorise withdrawals before a general election. |
| Purpose | Disclose anticipated expenses and revenue for the upcoming financial year. | Finance exceptional expenses without passing a budget so that the newly elected government can set a budget according to its policy. |
Is Vote-on-account the same as the Interim Budget?
Interim budget and vote-on-account are mentioned synonymously across the political and economic discourse. However, there are many subtle differences which make them different but correlated.
The contrast between them is reflected below.
| Parameter | Interim budget | Vote-on-account |
| Meaning | It reflects the revenue and expenses of the government for a part of the financial year. | It is used to get parliamentary approval for expenses the government has to incur for a part of the financial year. |
However, their correlation stems from the following factors.
- Both of them are presented before the general elections.
- They are meant to ensure that the incumbent government can discharge their duties without creating a burden on the upcoming government.
- Vote-on-account is usually passed along with the interim budget. While the interim budget details the income and expenditure for a part of the financial year, a vote-on-account strives to gain approval for making withdrawals from the consolidated fund of India.
How is a Vote-on-account passed?
Clause 2 of Article 116 of the Indian constitution details the procedure observed for passing a vote-on-account. It indicates that the parliamentary process observed is exactly similar to the annual union budget.
- The bill is floored in the Lok Sabha.
- The House holds discussion.
- The proposal is put to vote.
- If the motion receives sufficient votes, a law is passed allowing the government to make withdrawals from the consolidated fund of India.
Impact of vote-on-account
The government avoids making any new financial commitment to the country in a vote-on-account or interim budget. Following are the key highlights of a vote-on-account.
- It ensures the smooth continuance of government policies.
- It often highlights the achievements of the incumbent government.
- It can cause delays because no new projects are announced.
Vote-on-account of 2024
Since 2017, union budgets have been floored on the parliament on 1st February. However, the latest Lok Sabha election of 2024 was set to begin in April 2024.
Therefore, the government could not announce the union budget. Instead, Finance Minister Nirmala Sitharaman floored an interim budget or a Vote-on-account. It not only ensured the smooth functioning of the government but also gave insights into government performance and achievements.
Conclusion
The vote-on-account process is a true testament to India’s democratic spirit and continuation of smooth governance. This parliamentary process ensures that the economic functioning does not come to a standstill at times of transition. Smooth economic functioning is essential to sustain the market. The investors can continue observing their investment plans.
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