No change likely in Financial Year, date of Budget could be advanced further

No change likely in Financial Year, date of Budget could be advanced further

The government is unlikely to change the financial year to January-December, though it is considering whether it could further advance the date of the presentation of the Budget by a fortnight or so. 

The government this year presented the Budget on February 1, departing from the British-era practice of announcing Budget proposals on February 28. 

India currently follows April-March financial year, again a 150-year-old tradition dating back to British rule. 

The government had been mulling a shift to January-December financial year and set up a committee to deliberate the issue. 

Finance minister Arun Jaitley had on July 21 in a written reply to a question in the Lok Sabha said, "the matter of changing financial year is under consideration of the government". 

"For now (2018-19), changing the financial year appears unlikely," a senior government official told ET, adding that switching this year would mean the budget would have to be presented by end of October or early November, which is unrealistic. 

In addition, there is a is thinking that as a big change in taxation — the GST — has been rolled out, it will take some time to settle down. The GST rollout was preceded by the demonetisation exercise. Change in financial year at this juncture will add to the disruption. 

As elections are scheduled to be held in 2019, experts believe that the government will not change the financial year then as well. 

There have been divergent views on aligning the financial year with the calendar year. 

A committee under former chief economic advisor Shankar Acharya was set up in July, 2016 to look at the feasibility of the idea. The panel, however, did not find much merit in the idea. 

A NITI Aayog discussion note, on the other hand, said a change in the financial year was required as the current system leads to sub-optimal utilisation of working season. The financial year is not aligned with international practices and it impacted data collection and dissemination from the perspective of national accounts. 

A parliamentary panel also recommended shifting the financial year to January-December. 

Prime Minister Narendra Modi, subsequently, at the NITI Aayog governing council meeting on April 23 this year asked the states to "take initiatives in regard of advancing the financial year from January to December", following which Madhya Pradesh announced its intent to change the financial year. 

While a change in the financial year period for now appears unlikely, advancing the date of the budget is a possibility. The government is happy with the outcome of an early budget this year. It enabled front loading of government spending and its capital spending went up by 58 % in the first two months of 2017-18 as compared to the corresponding period of the previous year. 

Source:-The Economic Times