On Wednesday, Nirmala Sitharaman took on the role of union finance minister for her second consecutive term, preparing to present the full union budget in July 2024.
Anticipation is building for the full budget, where she is expected to outline the vision for the next five years and introduce key policy announcements. A major focus will be on addressing unemployment through measures to boost manufacturing.
Sitharaman, India’s first full-time woman finance minister, has presented six budgets, including one interim budget. In the interim budget for FY25, she adhered to tradition by sticking to vote-on-account measures only.
Interim Budget: At the beginning of the year, the finance minister presented an interim budget on February 1. This temporary financial statement is designed to keep the government operational until the new government takes office.
The interim budget includes necessary expenditures and allocations but typically avoids major policy announcements or changes. This practice ensures continuity of government functions and funding until a new government is established post-election.
Full Budget: Following the general elections, the newly elected government presents a full budget for the financial year. This year, the budget is expected to be presented in July. The full budget will detail the new government’s economic policies, expenditures, and revenue plans for the entire fiscal year, reflecting the administration’s priorities and policy changes.
This dual-budget approach ensures that the outgoing government does not make long-term commitments or major policy changes right before an election, allowing the incoming government to implement its financial strategies and policies. This standard practice in India during election years facilitates the transition between the outgoing and incoming administrations.
A union budget is valid until the end of the financial year on March 31, giving the government financial authority only until that date. For government expenditure occurring between March 1 and the formation of a new government, the incumbent government needs Parliament’s permission to incur costs during the interim period. Thus, the interim budget is released.
