New Delhi: The government will shift the financial year to January-December, from the current April-March pattern. The move is aimed to align it with the agriculture production cycle.
An announcement regarding this is likely to be made soon as per Cogencis sources.
Prime Minister Narendra Modi had backed the idea of the January-December financial year last year while addressing chief ministers at the Governing Council of NITI Aayog. Modi had said that in a country where agricultural income is exceedingly important, budgets should be prepared immediately after the receipt of agricultural incomes for the year.
And with the monsoon arriving in June, most of the schemes and spendings by states did not take off until October, leaving just half a year for their implementation.
The government had two years ago set up a high-level committee to study the feasibility of shifting the financial year to January 1 from the current practice of starting it from April 1. The committee submitted its report, reasoning for the change and its effect on the different agricultural crop periods and its impact on businesses, the taxation system and procedures, statistics and data collection.
Earlier, the government had also advanced the Budget presentation by a month to February 1 with a view to completing the legislative approval for annual spending plans and tax proposals before the beginning of the new financial year. As a result, public expenditure started from April 1. The government also scrapped a nearly century-long practice of having a separate railway budget and instead merged it with the general budget.
It had also decided to scrap a distinction between plan and non-plan expenditures as the classification resulted in excessive focus on the former with almost equivalent neglect to items such as maintenance, which are classified as non-Plan.
Till 2016, the Budget was presented on the last day of February and it used to be passed by Parliament by mid-May.