Financial year 2018-19 could begin from January instead of March, as the government is planning to make the switch for alignment with calender year after the matter was raised by Prime Minister Narendra Modi in Parliament during Budget Session.
Finance Minister Arun Jaitley on Friday told lawmakers that the government is considering to change the country's financial year to January-December from April-March.
"The matter of changing the financial year is under consideration of the government," Jaitley said in a written reply in the Lok Sabha.
According to previous reports, the switch would also change the presentation of Budget from January as in 2017, to November.
The matter has been examined recently by a committee constituted by the government under the chairmanship of former Chief Economic Adviser Shankar Acharya. The report of the committee has been received, the Finance Minister said.
He declined to elaborate whether the budget presentation would be advanced to November or December from February 2018.
This would be another historic change after advancement of the Budget presentation to February 1 this year, ending the decades-old practice of presenting the annual exercise in the last week of February.
According to the proposal under discussion, the Budget session of Parliament would have to be held well before December so that the budgetary exercise can be concluded by the year-end.
Since it takes nearly two months for the conclusion of the budgetary exercise, the possible dates for holding the Budget session could be the first week of November, the sources said.
The financial year from April 1 to March 31, currently in vogue nationally, was adopted in 1867 principally to align the Indian financial year with that of the British government.
Till then, the financial year in India used to commence on May 1 and end on April 30 of the following calendar year.
After Modi expressed his desire to align the financial year with the calendar year, the government had last year appointed a high-level committee to study the feasibility of shifting the financial year to January 1. The panel submitted its report to the Finance Minister in December.
Among the various factors, a NITI Aayog note had said that a change in the financial year was required as the current system leads to sub-optimal utilisation of working season.
It had also noted that the current financial year cycle was chosen without any reference to national culture and traditions or convenience of legislators.
Also, the financial year is not aligned with international practices and it impacted data collection and dissemination from the perspective of national accounts, according to the note prepared by NITI Aayog member Bibek Debroy and OSD Kishore Desai, citing experts.
A few months back, the Parliamentary Standing Committee on Finance also recommended shifting the financial year to the January-December.
Modi while advocating a change in the financial year had said that there is a need to develop robust arrangements that could function amidst diversity.
"Because of poor time management, many good initiatives and schemes had failed to deliver the anticipated results," the prime minister had said.
Madhya Pradesh became the first state to announce shifting of its financial year format to January-December from 2018.