Is it time to end a 150-year-old tradition and move to a Jan-Dec financial year?
With Finance Minister Arun Jaitley all set to present the budget for 2017-18 on February 1, 2017, India will again debate if a 150-year-old colonial-era tradition of a financial year that runs from April-March should be discarded and switched to January-December, in line with the country’s monsoons and agricultural harvests. The central government adopted the April-March financial year in 1867 to align the Indian financial year with the British government, according to this discussion note on changing India’s financial year released by Niti Aayog. Prior to 1867, a May-April financial year was followed. In July 2016, the finance ministry has constituted an expert committee–chaired by Shankar Acharya, former chief economic advisor–to look at the feasibility of changing the financial year, according to a statement by the ministry to the Lok Sabha (lower house of Parliament) on December 16, 2016. The committee will submit its report to the government on December 31, 2016.
India still a rain-dependent economy Sowing and cultivation in India occurs primarily during the south-west (kharif crops) and north-east (rabi crops) monsoons, with primary watering provided by the south-west monsoons between June and September. Kharif crops, such as rice and pulses, and rabi crops, such as wheat, determine both food security and exports (India is the world’s largest exporter of rice). “Any financial year, no matter when it begins or ends, will be affected by the behaviour of the south-west monsoon in the preceding financial year, as well as the one which falls within the financial year itself,” the Jha Committee is quoted as saying in the Niti Aayog discussion note. The committee concluded that the budget should be finalised in October, after the southwest monsoon is over–when the kharif crop is known and the rabi crop could be estimated. 156 nations follow calendar year as financial year Out of 227 countries, 156 follow the calendar year as their financial year, according to The Word Factbook issued by the USA’s Central Intelligence Agency.
Source: The Word Fact book, Central Intelligence Agency.
Article By :- Business Standard.