Shishir Asthana Moneycontrol Research
After nearly 150 years India is ready for a change in its financial year to make it coincide with the calendar year. This has been hailed as a sensible move.
But for the calendar year to be a reality, the government will have to be ready with its budget two months in advance. As per the proposal under discussion, the budget session of Parliament would have to be held well before December so that the budgetary exercise can be concluded by the year-end.
As it takes nearly two months for the conclusion of the budgetary process, the possible dates for holding the budget session could be the first week of November.
The government had asked its think-tank NITI Aayog to look into the pros and cons of moving the financial year. NITI Aayog in a note had said a change in the financial year was required as the current system leads to suboptimal utilization of working season.
The note also pointed out that the current financial year cycle was chosen without any reference to national culture and traditions or convenience of legislators. Also, the financial year is not aligned with international practices and it impacted data collection and dissemination from the perspective of national accounts.
The Parliamentary Standing Committee on Finance also recommended shifting the financial year to the January-December period a few months back.
Prime Minister Narendra Modi had been advocating a change in the fiscal year and is quoted as saying “Because of poor time management, many good initiatives and schemes had failed to deliver the anticipated results.”
Moneycontrol, in an article, welcomed the idea of a change in the fiscal as it aligns India’s financial accounting and fiscal strategy policies with those of a vast majority of its global peers. Initial inhibitions on the change in financial year would no longer be an issue with corporates as GST would anyway require them to keep their books in order at any point of time.
However, bringing the budget date forward might help the Modi government to squeeze in a Budget just before the next general elections. Reports say that the government is planning to change the fiscal from calendar year 2018, this would mean it will get to present a budget in November 2017 and another one in November 2018, six months ahead of the next election in May 2019.
Under the normal course government would have presented a vote of account on the state of the economy, now the government gets a chance to present a populist budget. How much this factor weighed in making the final decision is open to question, but what seems certain is an opportunity for freebies before the election.
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