Introduction
Budget plays an essential role in a nation’s economic development. It outlines a government’s estimated revenues and expenditures for the coming financial year. In other words, a budget provides a complete picture of the income and expenses of a nation. Without a budget, a government cannot effectively plan and control its financial affairs.
When learning about budget-related topics, it is essential to understand the difference between a full budget and a vote on account. In this article, we will discover the difference between both financial concepts.
What is a full budget?
According to Article 112 of the Constitution of India, the government is responsible for presenting an annual financial statement at the beginning of every financial year. This annual financial statement is commonly referred to as a budget. A full budget estimates the government’s revenue and expenditure for the coming financial year that starts on 1st April and ends on 31st March. It is a comprehensive financial plan that outlines the following:
- Projected revenue and capital receipts
- Projected expenditure
- Ways and means of raising revenue
- Receipts and expenditures of the previous financial year and the reasons for surplus or deficit
- Financial and economic policies for the coming year, new schemes/projects, taxation proposals, etc.
What is a vote on account?
Once a budget is presented in the Parliament, it is passed after discussions, voting on demand for grants and passing Appropriation and Finance bills. These discussions and voting take time. Since the government cannot withdraw money from the Consolidated Fund of India without parliamentary approval, there is a special provision of a vote on account. It ensures the government has sufficient finances to work.
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A vote on account is a grant in advance from the Consolidated Fund of India to help the government manage its short-term expenses till the full budget is passed. Usually, it does not involve any discussion or debate. It is essentially the legislature’s approval for the government to withdraw and spend from the Consolidated Fund of India till the conclusion of voting on demand for grants and adoption of the Appropriation Bill.
Usually, a vote of account is sought for two months only. However, the ruling government may seek it for more than two months during an election year. The full budget is presented when the new government takes charge.
Difference between full budget and vote on account
Now that you know the meanings of full budget and a vote on account, here are the key differences between both the financial concepts:
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Full budget
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Vote on account
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A full budget focuses on both the revenue and expenditure of the government
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A vote on account focuses only on the expenses of the government
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It is valid for twelve months or one financial year
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It is valid only for a short duration, which is usually two months or more during an election year
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A full budget is enacted only after discussions and voting on demand for grants and the passing of the Appropriation and Finance Bill
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Vote on account does not involve any discussions and voting on demands for grants
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A full budget includes new policies/schemes and may also alter the tax structure
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Vote on account usually does not include new policies/schemes. Further, it t cannot alter direct taxes as they must be passed through a Finance Bill
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Conclusion
The main difference between a full budget and a vote on account is their purpose and duration. A full budget aims at a nation’s balanced economic growth. It offers a detailed picture of the government’s financial plans for an entire year ahead. It introduces new schemes and policies and may also alter the tax structure. On the contrary, a vote on account has a limited scope and duration. Its purpose is to help the government manage expenses until the full budget is passed or a new government takes charge.
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