Introduction
The Finance Ministry is all geared to prepare the Interim Budget 2024. With its presentation day approaching, taxpayers are debating on convention-versus-rule in the document’s framework. According to the convention, there shouldn’t be any policy announcements in the budget in the election year. However, the rule has exceptions. It does not forbid any government from issuing policy schemes, provided the election is not yet announced.
At a public event held recently, Finance Minister Nirmala Sitharaman mentioned that the upcoming interim budget will cover the government’s expenses till the formation of the new government. It will be a simple vote on account.
What is an interim budget?
The government in power presents an interim budget when elections are due in the same year or when time doesn’t permit the presentation of a complete budget. It comprises the entire set of financial documents of the country. It also includes estimations for expenses and receipts, not for the whole fiscal year, but for the period the current government will be in power. The full budget is formulated and presented later by the newly elected government.
Does the interim budget have big announcements?
The Code of Conduct provided by the Election Commission of India does not allow the ruling party to propose extensive tax reforms in the interim budget. It is because it can influence voters and affect the voting process unfavourably.
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But if you analyse the Interim Budgets for 2004, 2014, and 2019, you will observe that each one had a major policy announcement. These policy announcements were related to One Rank-One Pension, subsidised food schemes, KISAN SAMMAN, relief for the automobile sector, etc.
Finance Minister Piyush Goyal announced the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) in the Interim Budget 2019. The initiative focused on providing up to Rs. 6,000 annually to small and marginal farmers as minimum income support. The amount was transferred in three equal instalments of Rs. 2,000 each to the bank accounts of the beneficiary farmers.
The scheme’s annual expenditure was estimated to be Rs. 75,000 crore. It was considered active from December 2018, with the first instalment due for the period ending March 31, 2019, paid during the fiscal year. Many believed the scheme worked for the BJP in the 2019 Lok Sabha elections.
Will the Interim Budget 2024 have spectacular announcements?
Finance Minister Nirmala Sitharaman will present the vote on the account budget on February 1, 2024. Many wonder if the trend for big policy announcements in interim budgets will continue this year.
Considering the depressed rural consumption, experts see a chance for the announcement of a scheme catering to the same. But, before doing so, the government must factor in the inflation, particularly food inflation. The government must evaluate the inflationary effect of mega-populist schemes while attempting to fulfil the need to boost rural consumption.
A statement released by Nirmala Sitharaman begs to differ. It shares that the upcoming budget will not have any spectacular announcements. It will only focus on meeting the government’s expenditures till a new government swears in. So, you might have to wait for the full budget to be prepared by the new government for amendments to existing schemes and the announcement of new policies.
Conclusion
Most tax experts agree that a vote on account budget will not have big-ticket policy announcements. But there are expectations for schemes with mass appeal, such as tax reductions, simplification of capital gains taxation, subsidies, and support for domestic manufacturing, among others.
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