Some 150 years after the British set India's financial year from April 1 to March 31, the government is now looking to reset the fiscal time-cycle. The government has set up a committee to examine the desirability and feasibility of having a new financial year. Finance Ministry, Arun Jaitley said that the four member committee will be headed by former Chief Economic Advisor Shankar Acharya and will examine the merits and demerits of various dates for commencement of financial year including the existing dates. The committee 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.
The other members of the panel include former Cabinet Secretary KM Chandrasekhar, former Finance Secretary to Tamil Nadu PV Rajaraman, and Senior Fellow at the Centre for Policy Research Rajiv Kumar. The panel will take into account the genesis of current financial year, suitability of financial year from point of view of correct estimation of receipts and expenditure of Central and State governments. It will also consider the effect of the different agriculture crop periods, impact on business, taxation systems and procedures, statistics and data collection and convenience of legislatures for transacting budget work.
The committee has been asked to submit its reports by 31st of December this year. In case the committee decides to recommend a change in the Financial Year, it will also work out the modalities for effecting the change. Currently, India follows the April-March fiscal year and all macroeconomic and company data, including the government's budget, are compiled and prepared for the same period. Most countries follow a January-December fiscal year, so a committee of secretaries headed by the cabinet secretary had earlier this year recommended changing the fiscal year to January-December.