The Centre seems to have shelved its plans to change the financial year cycle, at least for the time being. With the demonetisation of high-value notes and the roll-out of the Goods and Services Tax (GST) causing a temporary disruption, sources said the government is not keen to ensure that the economy is not unsettled further.
Though preparations for the Union Budget 2018-19 have begun, the change in financial year cycle could happen only after 2019.
Currently, the Centre follows a financial year beginning April 1 and ending on March 31. Last July, the Finance Ministry had set up an expert panel, led by former Chief Economic Adviser Shankar Acharya, to examine the “desirability and feasibility” of having a new financial year cycle.
Though committee’s report was not made available to the public, it is understood to have recommended a fiscal year coinciding with the calendar year, ie from January 1 to December 31.
“The report for a change in the financial year cycle is still under active consideration, but its implementation any time soon is unlikely,” said a source, adding that it could be considered in the medium-term. It may now be taken up after 2019, the source said.
The issue is also understood to have come up for discussions during pre-Budget meetings of the Finance Ministry with Nodal Ministries to finalise their Revised Estimates for 2017-18 and their Budget Estimates for the next fiscal.
Some Ministries are understood to have made enquiries on a possible change in the financial year cycle.
Finance Ministry officials had earlier said that such a shift would not be very difficult as it would only mean having three quarters in a fiscal for one year.
The Centre had also urged States to follow suit. Madhya Pradesh has already announced switching to the new fiscal year cycle.
Global agencies and many countries also follow the January-December financial year. For India, it is felt that the calendar year cycle would help improve the flow of expenditure before the monsoon sets in.