How Interim Budget will Affect Employed Personnel in 2024?

Analysis of Interim Budget on Human Resource Management and Employed Personnel

As the anticipated interim budget of the year is making headlines, many of us are either curious or eager to understand how the fiscal decisions will resonate to our professional lives. In the dynamic landscape of economic policies, every budget announcement has the potential to mold the livelihoods of millions.

In this blog, we will be unraveling the modifications and continuity that the Interim Budget brings to the human resource management processes and to an employed workforce.

What is Interim Budget?

An interim budget is a short-term budget that is presented by the ruling government during the transitional phase between two political administrations or when general elections are imminent. It includes budgeting of various components such as expenditures allocation, salaries and benefits, income and expenses, continuity measures, essential services, interest payments, taxation, operational costs, etc.

An interim budget refrains from introducing major changes in government programs, tax reforms, or other major policies as it is short-term and is valid till the new government comes into power to alter and present a full-fledged union budget.

The primary aim of an interim budget is to maintain continuity in the governmental policy till the new government takes on the position and to ensure the smooth functioning of the government departments during the transition phase of an election.

Difference Between the Interim Budget and the Full-Fledge Union Budget?

There is a significant difference between the interim budget and the final Union budget. Let us learn how is the interim budget different from the union budget by assessing different Parameters:

1. Duration

• Interim Budget: It is presented for a short period. Usually a month or two.
• Full Budget: It has a longer duration of one year (1st April to 31st March).

2. Occasion

• Interim Budget: This budget is presented in the transitional phase between two administrative parties or when the general elections are around the corner.
• Full Budget: This annual budget is presented every year to outline the government’s comprehensive fiscal policies, revenue projections, and expenditure plans for the entire fiscal year.

3. Major Policy Alterations

• Interim Budget: No major policy alterations are made in the interim budget as its primary motive is to maintain continuity in the governmental policies.
• Full Budget: It makes major alterations and introduces new policies, tax reforms, and long-term fiscal strategies.

4. Parliamentary Approval

• Interim Budget: Like the full budget, it requires parliamentary approval and is expedited. It necessitates the vote on account. Note: A “vote on account” is a provision that allows to government to obtain parliamentary approval for the essential government expenditures, usually a duration of a short period, say a few months, at the beginning of the fiscal year.
• Full Budget: It requires parliamentary approval and the process of approval includes detailed discussions and debates in Parliament, with thorough scrutiny of various budgetary provisions.

5. Financial Coverage

• Interim Budget: It covers the immediate financial requirements during the transitional period when the election is about to happen and until the next government comes to power.
• Full Budget: A full budget covers the entire fiscal year and highlights the government’s financial plans, policies on income and expenses, etc. It is presented by the Finance Minister.

What is the Impact of the Interim Budget on Human Resource Management?

The interim budget affects the human resources management processes in the following ways:

➔ Affects Planning

The foremost affected factor by an interim budget in human resource management is “planning”. The strategic decision-making goes on a toss after the introduction of the interim budget.

Budgetary changes might be accompanied by amendments in labor laws or regulations which affect the ongoing processes.

HR management should be vigilant and should stay flexible to adapt to any changes in labor policies in the government interim budget and ensure compliance with necessary modifications made by the government.

➔ Budget Constraints

With the introduction of interim budget, there prevails chances of shifts in economical aspects which will need you to reassess staffing levels, allocate resources efficiently, and adapt recruitment strategies based on the financial outlook.

➔ Technological Advancements

If the budget includes provision for investment in technological elements, human resource management processes can benefit by using updated technology in payroll management, resume parsing, and other HR processes by automation.

➔ Job Market Evolutions

With the implementation of an interim budget, if the governmental schemes, programs and various benefits are subject to revision, the job market ripples through variations. Budgetary constraints or expansions can affect workforce planning, hiring plans, etc., which affects the job requirements and availability of jobs in the market.

How does the Interim Budget Impact Employed Individuals?

The impact of the interim budget on the employed individuals is as follows:

1. Standard of living

The first thing that gets impacted or an employed personnel after the introduction of an interim budget is their standard of living. The budget may include provisions for job creation or incentives for certain industries while it might affect opportunities, job security, and overall economic conditions, thereby affecting employed individuals.

2. Social Security and Benefits

Modifications or adjustments in policies related to social security and employee benefits affects the income of employees, benefits and compensations, contribution to provident fund and more. Likewise, alterations in pension policies, retirement benefits, or other savings-related incentives, insurance percentages, interest rates, etc. can impact the retirement and insurance planning of employed individuals.

3. Taxation Changes

Interim budget the limited period budget, might not have the capability of making modifications to major tax reforms, but it can make alterations to minimal tax benefits for its smooth continuation, which affects the tax deductions amount and tax filing returns processes. An employed professional is required to stay informed about these changes to optimize their tax planning.

4. Spendings

An employed individual’s spendings get affected in different sectors such as healthcare, insurance, general expenses, and more if the new interim budget modifies it. For example – the interim budget can indirectly impact the spending of individuals through changes in inflation rates, interests rates, fuel prices, and other essential commodities.

5. Job Stability

The budget might be inclusive of job creation or recession which accordingly affect the employment opportunity of employed individual in the fast-evolving market landscape.

Concluding Remarks

The interim budget is for a shorter duration but can have a significant impact on the HR and employed individuals. So, it is essential to plan your business processes by keeping them flexible to adapt to any changes implemented in the interim budget. Furthermore, staying vigilant, and adaptive, can help in maintaining overall employee welfare, and organizational resilience.