Considering a change in the financial year, the Central government has decided to go to public to seek their feedback and suggestions. The Centre has asked people to give their views by September 30 on MyGov, an online platform that seeks to build a partnership between citizens and the government.
“There are many arguments for and against the change in financial year and these revolve around issues of budget and cash management by the government, seasonality of government revenue and expenditure, impact of monsoon on budget forecasting, working season, timelines involved in the legislative cycle of passage of Budget by Parliament, international comparability of fiscal statistics, aligning government’s financial year with year for tax assessment and corporate accounting purposes,” the government noted.
Seeking inputs from all the stakeholders, the government said that some arguments are less on the intrinsic merit or demerit of the change and instead focus on the timing when the change coincides with developments impacting businesses.
For the purpose, the Centre has appointed a Committee chaired by former Chief Economic Advisor Shankar Acharya to examine the desirability and feasibility of having a “new financial year”.
“We welcome your comments, suggestions, information and documents on the Committee’s Terms of Reference and issues related to it,” it said.
Other members of the panel are former Cabinet secretary K M Chandrasekhar; former principal finance secretary (Tamil Nadu) P V Rajaraman; and Senior Fellow at Centre for Policy Research, Rajiv Kumar.
The committee has to submit its report by December 31, 2016.
The committee will examine the merits and demerits of various dates for the commencement of the financial year, including the current date of April 1, taking into account past studies on the desirability of a change in the financial year, the government said in a release.
It will also look into the suitability of a new financial year from the point of view of receipts and expenditure estimates of Central and state governments, relationship of financial year to the working season, statistics and data collection, and the convenience of legislatures for transacting Budget work, it said.
While the country’s financial year currently runs from April 1 to March 31, it’s been argued that shifting it to a calendar year—January 1 to December 31 — is a “better option”.
This issue was last examined by the LK Jha Committee in 1985, but its recommendation to move to a financial year of January 1- December 31 (for Central and state governments), did not find many takers then.
A Niti Aayog panel headed by member Bibek Debroy had recently indicated its inclination towards a merger of the financial year with the calendar year.