The question of changing financial year in India {from April-March to January-December} has been considered several times in the past. What are pros and cons of this particular reform on Government Budgeting? Discuss explaining why governments so far did not favour any change in financial year.

Currently, the financial year followed by India runs from 1st April to the following 31st March. The issue of changing the financial year was last examined by the L K Jha Committee in 1985, however, the recommendation was not accepted by the then Government.
Again, there has been a debate over changing the financial year.
On the positive side, the change will align the fiscal with the monsoon cycle and the country’s agricultural harvests.
On the flip side-

• A changed fiscal period, the budget will have to be presented in November. Parliament sessions will have to be reworked, along with changes in data collection and working of state governments.
• Also, agriculture has become a less important part of the economy. India is well inside the limits of the technological envelope and the growth is positive in that direction and it is aligned with the nations of the world.
• Implications on budget presentations, accounting practices in private companies and for individuals.
• The new pattern will not work because it will also be coincide with any holiday season, such as Ganpati festival.

So far India did not favour any change in financial year because most of the countries around the world prefer the January-December fiscal year and this simply brings India in line with all the countries.

Topics: GS-III: Government Budgeting