In the bureaucratic maze of Indian policy-making, proposals are sometimes examined and re-examined but conclusions are not reached. This seems to be the case with regards to the commencement of the fiscal year. A fresh start has been made on the issue with the setting up of a panel under the leadership of former chief economic adviser Shankar Acharya to suggest if it is desirable and feasible to start the financial year from a date other than the current April 1. The panel has to examine the impact of proposed new dates on businesses, taxation, government procedures, statistics and data collection and submit its report by December 31. There are bound to be lobbies going to and fro on the issue, but what we would like is a definite move by a government that claims to be decisive.
The current date is a colonial legacy since 1867 because Britain starts its fiscal year in April. Until 1999, even the time, 5 p.m. was linked to 11.30 a.m. in London in tune with the House of Commons, but the then finance minister Yashwant Sinha changed it to the Indian morning hour. It is time now to switch the year as well from the colonial era All Fools Day, with good reason.
Time and again, it has been argued, even during the British Raj, that India’s economy is dependent on the monsoon rains and the fiscal year must reflect that. Since food supplies and industrial demand are substantially tied to the rains, it makes sense to plan government spending in line with that. In 1984, the L.K. Jha committee had recommended a January-December year and that seems even more desirable today. Most countries follow a January-December fiscal year. Also, as an increasingly globalised economy, it make sense for India to tune itself to world financial markets, which typically start the calendar year in a sprightly mood after the Western holiday season.
A long budget session in Delhi’s agreeable early winter for a January start seems more agreeable than one in a sweltering summer with a start in July, which has also been talked about. More important, details on the rainfall and anticipated harvests are clear by then to make the right budget calls. We cannot quite control the monsoon winds, but surely we can set our financial clocks to the season.