The Idea For A New Fiscal Year

There is debate arise when central government has setup committee,to look in this issue. The committee will be headed by former Chief Economic Advisor Shankar Acharya, and will include former Cabinet Secretary KM Chandrasekhar, former Tamil Nadu Finance Secretary PV Rajaraman
and Rajiv Kumar, a fellow of the Centre for Policy Research.The committee will submit its report to the Union Government by 31st December 2016.

History

At the time of Sher Shah Suri India’s financial year began on 1 May.This system was continued upto 1867,after that India moved its Financial Year to Fool’s day i.e. 1 April to 31st of March (British System).
In 1984,Congress government set up a committee under L.K. Jha, to check advantages and disadvantages of a fiscal year starting from January 1, April 1,July 1 or October 1,the committee advised synchronizing the fiscal year to the calendar year for the best long-term benefits.But its recommendations not opted.

Why There Is Need To Change

• In this current system, the funds for infrastructure reach the bodies for the execution just before the onset of the Monsoon. There is very little time left to utilize the available labor for construction activities. For the optimal usage of the slack-period an earlier beginning to the fiscal cycle will help
• Most of the development work starts after monsoon, hence most of the government spending is clustered at the tail end of the financial year, which leads to inefficiency and ineffectiveness
• In this current system there is little scope as it is impossible to make accurate forecasts for revenue or growth of Economy
• Many MNC’s follow Jan-Dec cycle for their annual reporting. Their Indian subsidiaries face difficulty in reconciling their books with the parent company
• India is among very few big countries to follow the April-March financial year, which makes international data comparisons difficult

On the basis of the logic that fiscal year should follow the Gregorian calendar,By this time the performance and impacts of both the south-west and northeast monsoons would be known well.However, the prediction(of economy) would be more accurate and also comparative study would be easier.

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