THE NARENDRA Modi government has renewed deliberations on a three-decade-old question: should India change the cycle of its financial year — from April-March to January-December?
On Tuesday, the secretaries of Finance, Expenditure and Economic Affairs ministries will take up the question. As an addition, the meeting, to be chaired by Cabinet Secretary P K Sinha, will also discuss merger of the Railway Budget with the General Budget — as prescribed by the NITI Aayog recently.
According to discussions ahead of the meeting, Railway Board chairman A K Mital will join in with the likely view that the Railways is comfortable with the present Budget cycle and has no problem either way, sources have confirmed to The Indian Express. The Board is learnt to have prepared a detailed justification on merits of a separate Rail Budget as well.
The government wants to understand how India stands to gain if the Budget cycle is altered to sync with the calendar year. The idea is to free the budgetary exercise from the impact of monsoon, which arrives within months of a financial year setting in.
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In 1984, the LK Jha committee, constituted to assess a change in the financial year, had recommended migration to the calendar-year cycle. The committee had said that changing the financial year to start from January would cushion the budget from the impact of southwest monsoon.
The then Congress government had decided against accepting the recommendation on three main grounds. First, the government had reasoned that advantages from the changeover were too minimal. Second, a change in financial year could upset collection of data from the markets, and it would take a long time before normal rhythm of the budget cycle is restored. Lastly, the change would give rise to issues such as extensive amendments to tax laws and systems, financial procedures relating to expenditure authorisation, and other matters.
But two bad monsoons that have raised farmer distress and even pressured the financial subsidy regime have necessitated a change of heart, and the government is open to discussing the issue afresh, sources said. As for Railways, they said that the Rail Budget’s fate looks more or less sealed, and it is only a matter of time before it is merged with the Finance Budget.