Search:



The Web

Rediff









Home > Business > Special


Business Desk | January 31, 2004

What is a vote-on-account?

The Indian Constitution says 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.

Since Parliament is not able to vote the entire budget before the commencement of the new financial year (like now, with elections round the corner), it is necessary to keep enough money at the disposal of government to allow it to run the administration of the country.

When the government needs to withdraw any money from the Consolidated Fund of India to cover its expenditure (especially during the time when elections are underway and a caretaker government is in place), it has to seek approval from the Parliament.

A special provision is, therefore, made for a vote-on-account' by which the government obtains the vote of Parliament for a sum sufficient to incur expenditure on various items for a part of the year.

This sanction of Parliament for withdrawal of money from the Consolidated Fund of India to meet the government's expenses is generally known as a vote-on-account.

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 provide an assessment of how efficiently the government spent its resources. There are also the revised estimates of the government revenue from different sources.

So, a vote-on-account gives one an idea of the effectiveness of the policies to mobilise tax and non-tax revenues.

Are a vote-on-account and an interim Budget the same?

No. 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.

So what is a 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 thus spells out both the manner in which the money is to be spent and how it is to be raised.

Why a vote-on-account and not an interim Budget?

A caretaker government typically opts for a 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.

Can a caretaker government not present a full Budget?

Yes it can. Since the concept of 'caretaker government' does not exist in the Indian Constitution, legally there is no distinction between caretaker government and a normal one.

Technically, it is not necessary for a government to present a vote-on-account in an election year. But a full Budget just before the elections makes a mockery of the whole exercise.

Can the finance minister make policy statements while presenting the vote-on-account?

Barring any announcement on taxation, the finance minister's speech before seeking Parliament's approval of the vote-on-account can contain his intentions on economic policy.

When former finance minister Yashwant Sinha presented the vote-on account in 1991, he announced the Chandra Shekhar government's plan to divest government equity in public sector undertakings.

For how long can a vote-on-account be in force?

Normally, the vote-on-account is taken for two months only. But during 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.

Typically this period does not exceed six months, as that is the maximum gap possible between two sittings of the Parliament.

Normally a vote-on-account is in operation till the full Budget is passed.


More Specials

Share your comments


 What do you think about the story?




Read what others have to say:


Number of User Comments: 3




Sub: comments

Hi, This was a knowledgeable article with some genuine information on an important topic. I really liked the way it has explained a contemporary topic ...


Posted by Prashant Sood





Sub: VOA

Hi! This was a gr8 article for non-com students like me! Awesome way of simplifying complicated terms. Feels good to know. Am connected always! ...


Posted by Kavita





Sub: article on 'vote-on-account'--reg

The article is really very informative.It has clarified some of the doubts regarding the current situation. Thanking you. Best regards, N.B.Sambamurthy Indian Institute of Science ...


Posted by N.B.Sambamurthy




Disclaimer




Article Tools
Email this article
Top emailed links
Print this article
Write us a letter
Discuss this article



Related Stories


Having the cake & eating it too

Jaswant to seek funds for Q1

Discussion on Budget on Feb 4



People Who Read This Also Read


FTA: Auto sector hits roadblock

Is India Shining?

4 steps to boost the market







Copyright © 2005 rediff.com India Limited. All Rights Reserved.