Finance Minister Nirmala Sitharaman has signaled that the forthcoming interim Budget, slated for presentation on February 1, 2024, is not expected to include major announcements. This marks her sixth budgetary presentation, encompassing five full budgets and one interim budget. Given the proximity to the general election scheduled for the following year, the interim budget becomes pivotal for securing parliamentary approval for expenditures beyond March 31. It is expected that the new government will unveil the comprehensive budget for the fiscal year 2024-25 in July.
The Minister clarified that the February 1, 2024, budget will essentially be a vote-on-account due to the ongoing election mode. Noteworthy budgetary changes are anticipated with the new government, expected to present the full Budget in July 2024. Speaking at a conference organized by the Economic Affairs Department and CII, the Minister highlighted that significant proposals and a ‘supercharged Budget’ are likely to be deferred until after the new government takes office and formulates the comprehensive budget in July 2024.
It has been customary for successive governments to refrain from significant policy announcements ahead of elections. This practice remains consistent even when the election schedule is undisclosed, and the code of conduct has not been implemented.
The code of conduct set by the Election Commission of India has guidelines for the inclusion of major schemes in the interim budget, as it has the potential to impact voters’ decisions.
During the general election year, the government presents the economic survey alongside the complete annual financial statement, typically occurring around June-July following the swearing-in of the new government.
In recent times, the interim budget has served as a significant tool for governments during general elections, functioning as a means to articulate the economic vision of the incumbent party.
However, deviations from this customary practice have occurred. In 2019, Piyush Goyal, who assumed additional responsibilities in the Finance Ministry, presented an interim Budget ahead of the general elections. During this announcement, he introduced a cash transfer of Rs 6,000 per year to 12 crore farmers.
Furthermore, tax incentives were unveiled for the middle-income bracket, with an increase in the standard deduction for salaried individuals from Rs 40,000 to Rs 50,000. Additionally, a complete tax rebate was declared for individual taxpayers with a taxable annual income of up to Rs 5 lakh. The interim Budget of 2019 had initially put forth the proposition that individuals falling within this income bracket would be exempt from paying any income tax.
Here are some other restrictions;
Even if a budget provision has been allocated for a specific scheme or it has been sanctioned earlier, the announcement or inauguration of such a scheme is prohibited during an election period. This restriction is in place to ensure fairness and prevent the misuse of government resources for electoral gains.
For addressing emergencies or unforeseen calamities, such as providing relief to those affected by droughts, floods, pestilences, or other natural disasters, as well as implementing welfare measures for the aged and infirm, the government may undertake such initiatives with prior approval from the Election Commission.
In the case of determining the minimum support price for wheat and other agricultural products, the Election Commission must be consulted before any decisions are made. This precautionary step ensures that such critical economic decisions are not influenced by electoral considerations.
To maintain the integrity of the electoral process, ministers and other authorities are prohibited from approving grants or payments from discretionary funds once elections are announced. Additionally, the release of funds under the MPs/MLAs/MLCs Local Area Development Fund for any scheme is suspended in areas where elections are ongoing until the completion of the electoral process. These measures aim to uphold the principles of fairness, transparency, and non-partisanship during the electoral period.
