The government on Wednesday set up a four-member panel headed by former chief economic adviser Shankar Acharya to examine the feasibility of “a new financial year”. This could lead to changing India’s financial year from April-March now to January-December or any other 12-month period.
The proposed shift could enable faster implementation of government programmes and projects if they are taken up from the beginning of the calender year (January) as compared to April in the current system. Also, the move could align India’s accounting system with the practice of countries, which follow calendar year (January-December.)
If the January-December financial year is implemented, India’s annual Budget may have to shift to December from February now, sources said.
Other members of the committee include former Cabinet secretary KM Chandrasekhar, former Tamil Nadu finance secretary PV Rajaraman and Rajiv Kumar (senior fellow in Center for Policy Research). “The committee will examine the merits & demerits of various dates for commencement of Financial Year including existing date (April to March),” the finance ministry said.
Other terms of the reference of the panel include the suitability of the financial year from the point of view of correct estimation of receipts and expenditure of central and state governments, the effect of the different agricultural crop periods and the relationship of the financial year to the working season. The panel will also factor in the likely impact on businesses; taxation systems and procedures; statistics and data collections; the convenience of the legislatures for transacting budget work.
The committee has been given time till December 31, 2016 to submit its report taking into account the various relevant factors