New Delhi

As Finance Ministry enters the final phase of preparing the interim budget, a debate ensued on convention-versus-rule in the contours of the document. The convention says in an election year, there should not be any big policy announcement in the Budget. The rule, at the same time, does not prohibit any government and the confidence of Parliament to make policy announcements, provided the election has not already been announced. Vote-on-Account is presented to seek approval for expenditure from April 1 for 2-3-4 months till a new government is elected and presents the full budget.

Examination of Interim budgets in 2004, 2014 and 2019 shows that they all contained important policy announcements that pertained to extending subsidised food scheme, One Rank-One Pension, relief for automobile sector, KISAN SAMMAN among others.

FM rules out

The question this year is, would this trend of big policy announcements in interim budgets continue ? Finance Minister Nirmala Sitharaman seems to have ruled it out.

“It is a matter of fact that the February 1, 2024 budget that will be announced will just be a vote on account because we will be in an election mode. No spectacular announcements will come at that time,” the FM said last month.

Those keenly watching the Budget preparations are mostly in agreement that no big announcements will be made in the interim Budget. D.K. Srivastava, Chief Policy Advisor with EY India said broad policy announcements can be made at any time before or even after the Budget or as part of the Budget, even if it is an Interim one. “However, if such an announcement involves undertaking expenditures during the months covered by the Interim Budget and the Budget has provided for such expenditures, it would amount to ‘breaking the convention’, leading to possible objections,” he said.

EC Embargo

According to Sanjay Kumar, Partner with Deloitte India, a democratically elected government as per the rule can always make policy announcements during its term. But as its term draws to a close, the government is fettered in some manner because the Election Commission puts an embargo on any policy pronouncement lest such policy announcements favour the ruling party and that can influence the election outcome.

“Article 116 of the Constitution, along with Article 114, come in handy at that time. It allows the government to present a votes on account which allows the administration to run, including some ongoing projects, till the next government comes into being,” he said.

Anil Sood, Professor with Institute for Advanced Studies in Complex Choices said even if a political party is confident of winning people’s mandate, it is inappropriate to take the mandate for granted. Given that the elections results are expected in May, the new government can present the budget by June or early July. “I, therefore, see no need to rush and present the complete budget. The current majority, which is valid for less than two months of the next fiscal, must not be the basis for the next year’s choices,” he advised.

Srivastava does not expect government to make any such announcements backed by provision of expenditure in the Interim Budget. “It would be best for the GoI to convey in the upcoming Budget that the status of government finances is robust and the government is attempting, in all sincerity, to progress towards achieving fiscal consolidation,” he said.

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