Cen­tre forms panel to look into fea­si­bil­ity of new fis­cal year cy­cle

Hindustan Times ST (Mumbai) - HT Navi Mumbai Live - - FRONT PAGE - HT Cor­re­spon­dent let­ters@hin­dus­tan­times.com

The gov­ern­ment on Wed­nes­day set up a com­mit­tee to ex­am­ine the op­tion of mov­ing to a new fi­nan­cial year cy­cle, re­plac­ing the ex­ist­ing AprilMarch pe­riod.

The com­mit­tee, headed by for­mer chief eco­nomic ad­viser Shankar Acharya, will study the “de­sir­abil­ity and fea­si­bil­ity” of mov­ing to a new fi­nan­cial year cy­cle, the fi­nance min­istry said in a no­ti­fi­ca­tion.

Dif­fer­ent coun­tries fol­low dif­fer­ent fi­nan­cial years. For the US gov­ern­ment, it runs from Oc­to­ber 1 to Septem­ber 30, and in Aus­tralia from July 1 to June 30. China fol­lows a Jan­uary 1-De­cem­ber 31 fi­nan­cial year.

Coun­tries like Canada, the UK, New Zealand, Hong Kong and Ja­pan fol­low an April 1-March 31 fi­nan­cial year like In­dia.

A new cy­cle will force changes in a string of ac­tiv­i­ties, in­clud­ing fi­nal­i­sa­tion of ac­counts, fil­ing of re­turns and the gov­ern­ment bud­get, which is usu­ally pre­sented in Fe­bru­ary, a month be­fore the fi­nan­cial year ends.

The com­mit­tee, which will sub­mit its re­port by De­cem­ber, will ex­am­ine the mer­its and de­mer­its of dif­fer­ent fi­nan­cial year cy­cles, in­clud­ing the ex­ist­ing one (April-March), the min­istry said.

This is not the first time In­dia has looked at chang­ing its fi­nan­cial year cy­cle. In 1984, the LK Jha com­mit­tee had rec­om­mended mov­ing to a Jan­uary-De­cem­ber for­mat. One main ar­gu­ment in favour of mov­ing away from the ex­ist­ing cy­cle is that the JuneSeptem­ber mon­soon — of­ten called the In­dian econ­omy’s lifeblood — sets in barely two months into the fi­nan­cial year, mak­ing pol­icy mak­ing dif­fi­cult.

Be­sides Acharya, the mem­bers of the com­mit­tee are for­mer Cab­i­net sec­re­tary KM Chan­drasekhar, for­mer Tamil Nadu fi­nance sec­re­tary PV Ra­jara­man and Cen­tre for Pol­icy Re­search se­nior fel­low Ra­jiv Ku­mar.

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