The cost of a new budget year

The debate about changing the financial year is back with PM Narendra Modi prodding the states, and Madhya Pradesh already taking the lead.

Published: 05th May 2017 04:00 AM  |   Last Updated: 04th May 2017 11:39 PM   |  A+A-

The debate about changing the financial year is back with PM Narendra Modi prodding the states, and Madhya Pradesh already taking the lead. The rationale behind sticking to the colonial April-March financial year has been questioned many times, but all efforts remained unsuccessful until now.

The ‘for’ camp says the current system doesn’t account for monsoon impact while allocating scarce budget resources, limiting investment planning and leading to sub-optimal utilisation of the working season. Those against it say any change could disrupt data collection, requires expensive amendments, and temporarily prevents the government from improving tax collections, which in other words is like asking, why fix something that ain't broken?

The existing system works just fine, but a calendar year, some say, can reorient the budget exercise, and deliver superior performance. Unlike the 1950s when agriculture contributed over 50 per cent to the economy, its share has now fallen to 17 per cent. Nevertheless, it’s a crucial cog. As per former RBI governor Dr C Rangarajan’s research, a one per cent rise in agricultural output increases industrial production and national income by 0.5 and 0.7 per cent respectively.

Budget policies involve complex balancing of receipts and expenditure, deficit targets, performance of ministries, political and economic imperatives. It's difficult to delineate the benefits derived by merely changing the financial year, but without considering the monsoon impact, the budget is ending up as a 'reactive' intervention than a proactive tool.

Even the CSO believes a change will align us with the UN. Now, of the 35 important data points, 11 are compiled on a calendar year basis and 22 as per the financial year. A shift potentially improves the quality of interventions and accelerates rural transformation. But first, all states need to be on board and amendments to the Constitution made, besides changes in direct and indirect taxation—all without a glitch, which is easier said than done.


Disclaimer : We respect your thoughts and views! But we need to be judicious while moderating your comments. All the comments will be moderated by the editorial. Abstain from posting comments that are obscene, defamatory or inflammatory, and do not indulge in personal attacks. Try to avoid outside hyperlinks inside the comment. Help us delete comments that do not follow these guidelines.

The views expressed in comments published on are those of the comment writers alone. They do not represent the views or opinions of or its staff, nor do they represent the views or opinions of The New Indian Express Group, or any entity of, or affiliated with, The New Indian Express Group. reserves the right to take any or all comments down at any time.

flipboard facebook twitter whatsapp