1) What is a vote-on-account?
Literally, a vote on the accounts of the Government of India. No money can be spent by the government without the Parliament approving it; so after the government presents the accounts of expenditure and income, the Parliament approves it. Only after this does the government get to spend the money.
2) So why is the Government presenting a vote-on-account? It is not a minority government.
In the normal course of budget-making and passing, the Budget is presented on February 28, after which there is a discussion and the details are scrutinised by a Parliamentary committee. It is usually the middle of May by when the actual Budget gets passed. This will be in the middle of the elections, or may even be after a new government is sworn in, depending upon the election schedule. So, since the government can’t get the Budget passed, it is getting a vote-on-account. This is also known as an Interim Budget sometimes.
3) How many votes-on-account has India had since 1948?
Every budget has a vote-on-account! So, in the years that there have been interim budgets, like the one Finance Minister Jaswant Singh presented before the NDA went in for elections, there will be two vote-on-accounts.
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 the new Budget gets passed only in mid-May. So, after the Budget is presented on February 28, the government moves a vote-on-account which gets it Parliament’s sanction to spend money for another two months or so.
4) How is the amount of money that is allocated/sanctioned under the vote-on-account to be decided?
It is usually pro-rata based on the full year’s allocation. So, if the CRPF was allotted Rs 1,200 crore last year, and the vote-on-account is presented for three months, a sum of Rs 300 crore will be released for the CRPF.
5) So, the government cannot spend more that it did in the year prior to the vote-on-account?
It can, if it wishes. There is no bar. It can ask the Parliament for Rs 500 crore for the CRPF for the next three months if it likes. The rider is that it cannot announce any new schemes. So, the expenses on the CRPF have to be part of the normal course.
6) Can this government decide to extend the National Rural Employment Gurantee Act (NREGA) spending in the vote-on-account?
If it wishes it can extend the coverage or even allocate it more money. It cannot, however, start an NREGA in urban areas, for instance. But any spending it does in the next three months will have to be accounted for in the full year’s Budget when it is presented. So, if the NREGA spending for the next three months is hiked to Rs 5,000 crore and the total NREGA spending in the full budget is Rs 10,000 crore, then only Rs 5,000 crore more will be allocated during the rest of the year.
7) Can you have a vote-on-account for longer periods?
Yes you can, but not for more than six months since, under the rules, the gap between two Parliament sessions cannot be more than six months.
8) So, can the vote-on-account be a pre-Budget list of great expenditure and tax cuts?
Yes it can. Jaswant Singh’s vote-on-account or interim budget was full of promises (this was contained in the first or Part A of the Budget Speech). But all the expenditure has to be subject to the conditions mentioned earlier – there can be no new scheme, and all expenses will be subject to the overall scheme-wise caps mentioned in the full Budget when that is announced.
9) Can the government announce tax cuts or impose new taxes?
No, it cannot. All indirect taxes come into effect immediately while direct taxes like those on our incomes are levied at the end of the financial year (or during it in the case of those who pay advance taxes). Since all such proposals have to be examined carefully by the Parliament, no new taxes can be levied. Nor can existing taxes be reduced.
10) So, the vote-on-account can show increased government expenditure, by raising the scope of the NREGA for instance; but it cannot show new revenues?
That is correct. The revenues shown in the estimates will be based on last year’s numbers with a certain tax buoyancy assumed – if GDP grows by 14 per cent in nominal terms, taxes will rise by 16 per cent, or something like that. The revenues do not factor in the impact of any new taxes. So, the fiscal deficit mentioned in the vote-on-account is usually an over-estimate, and is not to be taken seriously.
