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Cabinet clears ordinance to punish people holding banned notes beyond deadline

The Union cabinet cleared on Wednesday an ordinance to penalise those found holding a “high amount” of scrapped banknotes.

black money crackdown Updated: Dec 28, 2016 22:14 IST
HT Correspondent
HT Correspondent
Hindustan Times, New Delhi
Demonetisation,Cash crunch,Ordinance
The Specified Bank Notes Cessation of Liabilities Ordinance makes holding a large number of old Rs 1000 and Rs 500 notes a criminal offence that will attract a jail term and a monetary penalty of five times the amount of old cash one is caught with.(Sunil Ghosh/HT File Photo)

India can shift to a January to December financial year, recommended a government-appointed committee headed by former chief economic adviser Shankar Acharya. The proposed switch could end the 150-year tradition of an April to March fiscal introduced by the British.

The committee, set up this July, made this suggestion in its report to the finance ministry this week.

It was mandated with the task of studying the merits of government think-tank NITI Aayog’s suggestion to position the financial year with the calendar year.

Sources said the panel supported the move and listed the pros and cons of a shift in the accounting period. It underscored that the change will align the fiscal with the monsoon cycle and the country’s agricultural harvests.

“We have submitted our report. We have studied at length the feasibility and desirability of changing the financial year,” Acharya said on Wednesday.

Calendar options such as Samvat followed by the stock markets and the farm harvest that begins from July were weighed before the panel settled for the January to December financial cycle, divulged a government source who did not wish to be named.

The rabi and kharif winter and summer crop periods, and the fact that more than 156 countries and several multinational companies follow the calendar year as the accounting period were factors that tilted the balance for a changed fiscal.

The April-March fiscal was adopted in 1867 in line with the practice in imperial Britain. The Congress government in 1984 gave a shot at changing the financial year, appointing former RBI governor LK Jha to head a committee to explore the benefits of such a move. The idea was to ensure speedy allocation of funds during drought years.

Besides Acharya, an Oxford- and Harvard-educated economist, the 2016 panel included former cabinet secretary KM Chandrasekhar, former Tamil Nadu finance secretary PV Rajaraman, and Rajiv Kumar, senior fellow with the Centre for Policy Research.

Economists are divided on the committee’s recommendations.

Since agriculture contributes more than 15% to India’s GDP and above 58% rural households depend on farm yields, many experts have supported this move.

“In case of a drought, which happens between June and September, a change in the accounting period from January to December will help in better budgeting. If the Union budget is presented in November, then early allocations will help the agro-economy and farmers,” said agriculture economist Ashok Gulati, backing the proposal.

But former chief statistician Pronab Sen remained sceptical.

“I don’t see the need to change the accounting period. What needs to be done is timely passage of the budget, so that the construction period is not hampered. In any case, for construction, the monsoon months are a lost period,” he said.

Adoption of these recommendations by the government would mean yet another change in the date when the budget will be presented.

In case of a changed fiscal period, the budget will have to be presented in November. Parliament sessions will have to be reworked, along with changes in data collection and working of state governments.

Chartered accountants point out that the change will not impact the common man. The taxation period will just change from the current April to March cycle to a new 12-month period.

“Whatever the decision of the government, the financial year has to be same as the tax year, then there will be no hassles for the common man,” Girish Vanvari, head of tax, ‎KPMG India.

(With input from agencies)

First Published: Dec 28, 2016 12:45 IST