The Union Budget is one of the most important events in the financial calendar for industry and individuals alike. This is when the government announces the financial performance of the previous year, and estimates expenditure and taxation norms for the new financial year.
This happens on the last working day of every February.
However, in 2014, the Finance Minister, P Chidambaram, will present an interim Budget, not annual Budget.
India's Finance Ministry has already started preparations for the next Budget, according to this Economic Times report.
Here are seven things to know about this:
· Just like 2009, general elections will be held in the next calendar year. This falls in May, in the first half of the financial year. After the election results, a new government will come in place.
· For this reason, it is not right that the outgoing government or the newly elected government prepare a budget for the entire fiscal year.
· The ruling government will present a shorter version of the Budget. This is called vote on account (VOA) or interim budget.
· A few months after the elections, the new government will take charge and present a budget for the rest of the financial year. This is normally done so within six months.
· Just like the Union Budget, the interim Budget will detail the expenses and revenue of the government in the fiscal year gone by – FY2013-14.
· It will also give estimates of expenses to be incurred in the few months until the election. However, it cannot tweak rules for taxation, which is an important source of income for the government. The Budget would then be debated in Parliament, and voted for approval.
· Since the VOA or interim Budget takes place prior to the general election, the government is not allowed to announce any major welfare schemes as per the Election Commission’s Code of Conduct. This is done so that the government in power cannot swing voters.
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