February 17, 2014

The Tale of Vote-on-Account

By Vinayak Y Thakur

VIDE the special provision known as 'vote-on-account', the Government obtains the vote of Parliament for an amount sufficient to incur expenditure on various items for a part of the year. This sanction by the Parliament to obtain money from the Consolidated Fund of India to meet the expenditure of the Government is known as vote-on-account.

Need for vote-on-account

In the normal course of budget-making and passing, the Budget is presented on February, 28, after which there is discussion and the details are scrutinised by a Parliamentary Committee. The full budgeting is done from April 1 to March 31. So the sanction that the Government gets from Parliament for spending expires on March 31. But, as known, it is usually the middle of May by when the actual Budget gets passed.

The Constitution of India mandates that all revenues received by the Union Government and the loans raised by it are to be put into the Consolidated Fund of India. This does not include anything that is put into a Contingency Fund. When the elections are round the corner, like this year, and since Parliament is not able to vote the entire budget before the commencement of the new financial year, it becomes necessary to keep sufficient money at the disposal of the Government to allow it to run the administration of the country. Apart from this, there are also the revised estimates of the expenditure incurred by the Government during the financial year that is coming to an end. These estimates provided an assessment of how effectively the government spent its resources. There are also the revised estimates of the government revenue from different sources.

What is full Budget?

The Budget is a statement of the financial position of an administration for a definite period of time based on estimates of expenditures during the period and proposals for financing them. A full Budget spells out both the manner in which the money is to be spent and how it is to be raised.

Difference between vote-on-account and interim budget

A Government which has less time left in the Parliament usually go for vote-on-account as it is regarded improper for an outgoing Government to impose on its successor changes that may or may not be acceptable to the incoming Government. Further, vote-on-account deals only with the Government's expenditure; however, Interim Budget is a full set of accounts, including both expenditure and receipts. A vote-on-account cannot alter direct taxes since they need to be passed through a Finance bill. Common feature between them is that both include the previous year’s financial performance of the Government.

Tenure of vote-on-account

Normally, the vote-on-account is taken for two months only. But during the election year or when it is anticipated that the main Demands and Appropriation Bill will take longer time than two months, the vote-on-account may be for a period extending two months. As a matter of fact, this period does not exceed six months as that is the maximum gap possible between two sittings of the Parliament. Normally, it is in operation till the full Budget is passed.