Understanding the Vote on Account - Seeker's Thoughts

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Thursday, 31 January 2019

Understanding the Vote on Account


On February 1, the government is set to present its last Budget ahead of the elections. Conventionally, a government at the end of its term has gone in for a vote on account rather than a full Budget. 

Therefore, contradict opinions have circulated. While few are in favours of a full budget, others oppose it on the ground that this is an election year and the government has already presented 5 full budgets.

What is the importance of passing budget?
The government has to pass budget to release funds for proper functioning for a time being, until the new government has been formed. The Budget for temporary period is called as interim budget.

An Interim Budget is not the same as a ‘Vote on Account’.

What is Vote on account?
While a ‘Vote on Account’ deals only with the expenditure side of the government’s budget, an Interim Budget is a complete set of accounts, including both expenditure and receipts. An Interim Budget gives the complete financial statement, very similar to a full Budget.
A vote on account essentially means that the government seeks the approval of Parliament for meeting expenditure — paying salaries, ongoing programmes in various sectors etc — with no changes in the taxation structure, until a new government takes over and presents a full Budget that is revised for the full fiscal.

Understanding – the Article 266 
Article 266 of the Constitution of India mandates that Parliamentary approval is required to draw money from the Consolidated Fund of India. Besides, Article 114 (3) of the Constitution stipulates that no amount can be withdrawn from the Consolidated Fund without the enactment of a law (appropriation bill).

Why present a vote on account?
The reasoning is that there is little time to get approvals from Parliament for various grants to ministries and departments and to debate these as well as any provisions for changes in taxation.
More importantly, the reasoning is that it would be the prerogative of the new government to signal its policy direction, which is often reflected in the Budget.

Why is it controversial?

Full Budget deals with both expenditure and revenue side but Vote-on-account deals only with the expenditure side of the government’s budget.

The vote-on-account is normally valid for two months but full budget is valid for 12 months (a financial year).

As a convention, a vote-on-account is treated as a formal matter and passed by Lok Sabha without discussion. But passing for budget happens only after discussions and voting on demand for grants.

Therefore, the problem is related to the passing of vote of account is- the duration and the discussion, which has led to the diversity of opinion.