Union Budget

According to Article 112 of the Indian Constitution, the Union Budget of a year, also referred to as the annual financial statement, is a statement of the estimated receipts and expenditure of the government for that particular year. Union Budget keeps the account of the government’s finances for the fiscal year that runs from 1st April to 31st March.

The term budget is actually derived from a French word ‘Bougette’ which means a sack or a pouch. It was first used in France in 1803.

The term budget is not mentioned in the constitution of India. It is rather mentioned as the annual financial statement under article 112.

The first Union budget of independent India was presented by R. K. Shanmukham Chetty on November 26, 1947.

Union Budget is classified into Revenue Budget and Capital Budget.

Revenue budget includes the government’s revenue receipts and expenditure. There are two kinds of revenue receipts – tax and non-tax revenue. Revenue expenditure is the expenditure incurred on day to day functioning of the government and on various services offered to citizens. If revenue expenditure exceeds revenue receipts, the government incurs a revenue deficit.

Capital Budget includes capital receipts and payments of the government. Loans from public, foreign governments and RBI form a major part of the government’s capital receipts. Capital expenditure is the expenditure on development of machinery, equipment, building, health facilities, education etc. Fiscal deficit is incurred when the government’s total expenditure exceeds its total revenue.

Interim Budget

An interim budget is presented during the transition period when a new government is due to take over but the ruling government needs Parliament’s go-ahead to take out money from the Consolidated Fund of India, where all the revenues are kept, for its expenses. The Interim Budget documents every detail of the government’s expenses and earning during that period. The Interim Budget contains all the relevant estimates of the government’s expenditure and revenue, and also some policy measures if necessary.

Difference between Interim Budget and Vote on account – 

The ‘Vote on Account’ is just the estimate of expenses the outgoing government requires before the General Election’s period. The ‘Vote on Account’ only deals with the government’s expenditures. On the contrary, an Interim Budget gives full details of the government’s accounts, including both receipts and expenditures.
 

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