Budget FAQs: What is vote on account?

With Finance Minister Nirmala Sitharaman set to present the Union Budget 2020, here's a lowdown of key terms:

What is vote on account?

A vote on account, as defined by Article 116 of the Indian Constitution, is a grant in advance for the central government to meet short-term expenditure needs from the Consolidated Fund of India, generally lasting for a few months till the new financial year kicks in.

Article 266 of the Indian Constitution defines the Consolidated Fund of India, which is where all the revenue of the central government, be it from taxes, funds raised by loans and interest on loans, and a portion of taxes from states, is parked.

It states that no money from the Consolidated Fund may be withdrawn except under an appropriation undertaken by law, for which the Centre passes an appropriation bill during the Union Budget.

However, appropriation bills tend to require time to pass in the Parliament and become law, and to alleviate any problems rising from such as situation as the Centre requires permission to withdraw any sum of money from the CFI from the beginning of a new financial year, a vote on account is passed.

Typically, a vote on account is treated as a formality and passed with no discussion on the matter. It is also used during the final year of the elected government to pass a short-term expense bill to keep things running till the new government can ratify a full Budget. It is usually laid out for two months and foregoes allocation of funds for major projects, being allocated for salaries, interest on loans, subsidies and so forth instead.