Key Points
Traditionally, a vote-on-account is in order just before the elections when the incumbent government asks Parliament for permission to spend a certain amount of money for the first three months of the next finanical year after which the full budget would come into force..
The shape of the interim budget depends on the state of the economy that decides the extent of fiscal space available to the government and, more importantly, the political and electoral calculations of the incumbent government as well as the mood of the voters..
How interim budgets have shaped upSince the law does not prescribe any clear guidelines for the budget that comes right before the general elections, it can take any shape, even though the tradition and ethics would demand the job of making a full budget be left to the government that comes to power after a few months and the interim budget should not tie the hands of the next government or present it with any fait accompli...
In such circumstances, Chidambaram used the interim budget to shore up the credibility of the government by pledging to contain the fiscal deficit at 4.6% of the GDP against the target of 4.8%..
But a government which is known for leaving little to chance and a party known for its gargantuan electoral war machine and aggressive tactics might not let an opportunity like interim budget go waste, expecially when the economy, which is doing well on growth as well as inflation, provides it comfortable fiscal space...
