India to bid good bye to its ‘old’ financial year in 2018?

By:Prasanta Sahu, New Delhi Updated: July 12, 2016 7:25

On July 6, the government set up a four-member panel headed by former chief economic adviser Shankar Acharya to examine the feasibility of changing India'sfinancial year.India may make the calendar year, instead of April-March, as its new financial year from as early as 2018 as part of its efforts to align the accounting system with the most prevalent practice in the world, sources said.The move is part of three major budget-related initiatives including merger of railway budget with the general budget (likely in 2017-18), and dropping of Plan and non-Plan distinction (certainly from 2017-18) in allocation of resources, an official said.“If we are able to align our numbers with broader global numbers, it makes sense to make calendar year as financial year compared to April-March spread over two calendar years,”said Devendra Pant, chief economist at India ratings.

Narendra Modi government may break historic 150-year old tradition from 2018; also likely to shift Budget to NovemberFinancial year change: Narendra Modi government may break historic 150-year old tradition from 2018; also likely to shift Budget to November.

The financial year from April 1 to March 31, currently in vogue nationally, was adopted in 1867 principally to align the Indian financial year with that of the British government. (Illustration: Shyam)With Prime MinisterNarendra Modipitching for change, the financial year in India from 2018 could well start from January instead of the current April. Also, the move may also encompass the Budget, which may be brought forward to November, PTIsaid citing high-level government sources. This is being planned in an effort to align the financial year with the calendar year. If this happens, then a tradition dating back 150 years will be broken.Come 2018 and the financial year in India could commence from January instead of April as the Centre appears set to make the historic transition to end the 150-year-old tradition. Accordingly, the next Budget could be presented by the Centre in November this year, high level government sources told PTI here today. The sources said the government is working on aligning the financial year with the calendar year after Prime Minister Narendra Modi pitched for a change. This would be another historic change after advancement of the Budget presentation to February 1 this year, ending the decades-old practice of presenting theannual exercise in the last week of February. According to the proposal under discussion, 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. Since it takes nearly two months for theconclusion of the budgetary exercise, the possible dates for holding the Budget session could be the firstweek of November, the sources said.The financial year from April 1 to March 31, currently in vogue nationally, was adopted in 1867 principally to align the Indian financial year with that of the British government. Till then, the financial year in India used to commence on May 1 and end on April 30 of the following calendar year. After Modiexpressed his desire to align the financial year with the calendar year, the government had last year appointed a high-level committee to study the feasibility of shifting the financial yearto January 1. The panel submitted its report to the Finance Minister in December. Among the various factors, a NITI Aayog note had said that a change in the financial year was required as the current system leads to sub-optimal utilisation ofworking season.