Govt in a hurry

It commenced with an operation to cleanse Black Money that is still ongoing under different names. It continued with merging the Railway Budget with the Union Budget and presenting the combined Budget a month earlier than it has been done traditionally. It probably reached its pinnacle with the November 8/8 pm address of the Prime Minister demonetising high value currency.

The icing on the cake was the introduction of GST from July 1 despite the fact that no one including the Government was prepared for it. In all the above events, we are referring to the inclination of the present Government to keep on proposing some change or the other to existing practices.

The latest in this series is the proposal to change the financial year from April-March to January-December. This too is not really an innovation having been thought of by the Congress Government in 1984 to ensure speedy allocations to farmers. As is their wont when reforms are to be introduced, another Committee was set up to study the pros and cons of moving over to the calendar year.

Since farming contributes more than 15 per cent to India’s GDP and above 58 per cent rural households depend on farm yields, many experts have supported this move. In its report, the Committee has recommended that the fiscal year be changed and listed the pros and cons of a shift in the accounting period. It felt that the change would align the fiscal with the monsoon cycle and the country’s agricultural harvests.

Calendar options such as Samvat followed by the stock markets and the farm harvest that begins from July were weighed before the panel settled for the January to December financial cycle. The rabi and kharif winter and summer crop periods, and the fact that more than 156 countries and several multinational companies follow the calendar year as the accounting period were factors that tilted the balance for a changed fiscal. It would also do away with a practice that has been a legacy of the British Raj.

What needs to be debated is whether the fiscal year really needs to be aligned with the monsoon cycle and the country’s agricultural harvests. It is possible that the Government is contemplating this change in order to facilitate the Government’s commitment to double farm income by 2022. If it is only a question of allocating funds to the farm sector, the need to boil the ocean and change the fiscal year seems too much to do for too meagre a cause. A government that is depending on data analytics is surely bound to have enough data to ensure that Budget allocations to agriculture are adequate even during times when the monsoons decide not to show up. Even if there is a need for some urgent allocations, it is not that the Government does not have any options. When all else fails, they can always pass an Ordinance.

Changing to a calendar year would mean that the Budget would have to be presented in November. Since Union Budgets these days have been routine, it would only mean a change of date to the aam aadmi . The decision to change the fiscal year does not seem to have a reason that would make everyone question why it was not thought of before.

Instead of introducing one change after another in rapid succession, the Government would do well to pause and attempt to systematically fix areas that are crying for reform.

The writer is a chartered accountant

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