Interim budget: How adventurous will Modi sarkar get

New Delhi, Jan 30: The government is set to present its last budget on February 1, before the general elections. There has been a lot of speculation about the nature of this budget as custom demands that it should be an interim one as the government will not have the time before the elections to pass a full budget.

When the government of the day does not have time to present the full budget in the wake of a national election, it presents an interim budget. Propriety demands that the full budget be left to the next government.

An interim budget is needed so that the Parliament gives the government spending rights only till the end of the financial year ending March 31.

If a government cannot present a full budget, it will need parliamentary authority for incurring expenses in the new fiscal year until a new budget is presented.

Through an interim budget, Parliament passes a vote on account that allows government to meet the expenses until a new budget is presented. In an election situation, the vote on account is for a period of four months.

In an interim budget, vote on account seeks parliament's nod for incurring expenditure. The incoming government however has the freedom to change the estimates in the new budget that it would present.

However the budget this time will not be a mere formality of placing the accounts on the floor of the House. It is the final opportunity for the government to make big ticket announcements and hence one would expect that this would not be just an interim budge.

There has been plenty of speculation on what the government may announce. There has been talk about an announcement regarding direct income transfers to farmers, the abolition of income taxes for those in the lowest tax bracket etc.

However in the long run, such announcements could be risky. An announcement on direct transfer could impact the producer-subsidy government support in the farm sector. Moreover an announcement on income tax could also impact for both enhancement of productivity and collection of taxes.

So far the government has kept everyone guessing. Arun Jaitley had hinted a few weeks back that it would be more than an interim budget. However he would not be presenting the budget as he is away for treatment in the United States. The budget would be presented by Piyush Goyal, who currently holds the finance portfolio.

The budgetary exercises for the one to be presented in February had begun in October 2018 itself. The finance ministry had even imposed a quarantine from December, which bars the entry of the media into the North Block where the Finance Ministry is housed. The quarantine remains in force until the budget is presented.