NEW DELHI, Aug 26: Keen on a wider debate on changing the financial year, government has sought public comments on the desirability of replacing the existing period in a bid to improve budgetary process and cash management.
The government as well as most corporates in India follow April 1 to March 31 as the financial year.
A post on mygov site said: “There are many arguments for and against the change in financial year which revolve around issues of budget and cash management by government, seasonality of government revenues and expenditure, impact of monsoon on budget forecasting, working season, timelines involved in the legislative cycle of passage of budget by the Parliament…”
It also flagged issues concerning international comparability of fiscal statistics, aligning government’s financial year with year for tax assessment and corporate accounting purposes.
Some arguments are less on the intrinsic merit or demerit of the change and more on the timing of the change, such as when it coincides with other developments impacting businesses, said the write-up, inviting public comments by September 30.
To examine the feasibility of having a new financial year, the government has already set up a committee headed by former CEA Shankar Acharya.
The committee, which will submit its report by December, will have to provide reasoning for the suitability of the financial year from the point of view of correct estimation of receipts and expenditure of central and state governments.
Besides Acharya, the members of the committee are former Cabinet Secretary K M Chandrasekhar, former Finance Secretary Tamil Nadu P V Rajaraman and Centre for Policy Research Senior Fellow Rajiv Kumar.
It also has to state its effect on the different agricultural crop periods and the relationship of financial year to the working season.
Besides, the committee will also have to analyse its impact on businesses, taxation systems and procedures, statistics and data collection and the convenience of the legislatures for transacting budget work.
The issue of change of financial year was last examined by the L K Jha Committee in 1985, whose recommendation to move to a financial year of January 1-December 31 (for Central and State Governments) was not accepted by the then government, it said. (PTI)
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