The budget exercise with the government departments will be initiated in October, even as the government is likely to present the Union Budget in November. The government is scheduled to begin the budget exercise in October, reported ET Now citing unidentified government sources. In a departure from protocol, the government had presented the Union Budget on February 1, ending the decades old practice of presenting the annual exercise in the last week of February.
According to a note by the NITI Aayog wherein the need to change the financial year to January to December is discussed, 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. NITI Aayog believes that currently, the government is unable to optimally allocate resources in its Budget, as the timing of the current financial year does not take into account the monsoon factor.
According to NITI Aayog, the appropriateness of the current financial year has been questioned at various points of time throughout its 150 year history. “A major consideration driving such suggestions was that the financial year timing did not allow the Government to account for the impact of monsoon rains (one of the key factors impacting the overall socio-economic dynamics of the country) while allocating scarce budgetary resources. This limitation significantly impacted the investment planning outputs of the budget,” says the policy think tank in a discussion note.
In its discussion note, NITI Aayog quotes the Chamberlain Committee’s observation that under the present arrangement, the Budget estimates are prepared in ignorance of “the most important factor on which the results of the year will depend”. According to NITI Aayog, the present date is almost the most inconvenient possible for the budget, and suggests that the date be moved to November 1 or January 1. There may be administrative difficulties in carrying this suggestion into effect, but financially, it would be a great improvement, says the report.