Difference Between Interim Budget and Union Budget

The main difference between the interim budget and the union budget is their frequency, nature and purpose. The union budget is a permanent announcement for the upcoming fiscal year, made every year. However, the interim budget is only announced during the transition of government to maintain continuity. These documents play a crucial role in deciding policies and estimations and have a strong effect on the economy. Understanding the difference between union and interim budget is important to clarify the terminologies.

What is the Union Budget?

The annual statement of the government, indicating the past fiscal year’s performance and estimating for the next financial year is the union budget. It projects the government’s receipts and expenditures for the next financial year. It is presented on February 1 (The exception can be the general election year. 

• This document helps implement the government’s policies seamlessly.  
• It includes revenue and expenditure estimations, subsidies, long-term investments, performance expectations, sector-specific activities, etc. 
• The budget also presents details on various government schemes, policy changes related to taxation, and projections for key economic indicators.  

The presentation of this budget is a significant event that can affect different economic sectors. It provides insights into the government’s priorities, its approach to fiscal management, and its vision for the nation’s economic development. After its presentation, it is passed in the parliament. 

The difference between the union and the interim budget can be explained after understanding the interim budget.

What is the Interim Budget?

A temporary financial statement presented by a government during a transition period is known as the interim budget. It aims to bridge the gap for a short period and provide a brief summary of the schemes, performance and minor changes. The main difference between union and interim budget is that while the former provides a financial roadmap for the next fiscal year, the latter ensures the continued functioning of the government until a new budget can be formulated.  

• The objective of this document is parliamentary approval for necessary schemes and functioning for a few months. 
• It avoids significant policy changes, tax revisions, or new spending initiatives.
• It focuses on allocating funds for ongoing projects, salaries, and other essential operational costs. 
• A basic framework for financial continuity, allowing the new government to conduct a review of the economic situation is provided. 

Understanding the difference between union budget and interim budget can help individuals understand and simplify these terms.

Significance of Fiscal Budget

These budgets are necessary in the economy in many ways:

• Provide directions for the next financial year.
• Present performance metrics for an economy, such as deficit and Gross Domestic Product data.
• Explains the policies and aspirations of the ruling government.
• Provides a comprehensive picture of the economy.
• Maintains a good check on resource allocation and management.

Difference Between Union Budget and Interim Budget

Understanding these budgets in detail would require individuals to differentiate between them.

Basis of Difference	Union Budget	Interim Budget
Purpose	It annually presents the estimated performance, resource allocation, and overall health of the economy.	It presents a brief summary of past financial years and estimations for an economy in the year of government transition.
Frequency	It is presented every year.	It is a temporary announcement made in the year of government transition.
Nature	It is a permanent and final announcement spanning up to the completion of the next fiscal year.	It is a temporary statement until the election of the next government.
Effect	It makes a strong impact on the different parts of the economy.	It has a comparatively low effect.
Changes	Major changes are announced in it, such as tax policies, subsidies, schemes, etc.	Due to its short term, no major decisions affecting the economy are announced.
Presenter	The existing or ruling party in the government will present it.	The party in rule before elections present it.

Conclusion

The Union Budget is a summarising and annual document with a focus on the next financial year. The interim budget is a temporary document focusing on the continuity of the economy and governance. The difference between an interim budget and a union budget is based on its purpose, nature, changes, effect, etc. Are you willing to learn about more interesting topics? Log in to PowerUp Money or download the financial planning app today!