Exclusive | Government has no plans to adopt a Jan-Dec financial year

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The Indian government has no plans to change its current accounting year to align it with the January-December calendar year followed by many countries.

Finance Ministry officials reviewed the practice in the run-up to the recent Budget. Prime Minister Narendra Modi had earlier asked the officials to look into the reasons behind following an April 1 to March 31 fiscal year.

Consequently, Finance Ministry officials studied the practice in this regard in other countries before concluding that a change was not required.

Economic Affairs Secretary Tarun Bajaj told Money9 the primary reason behind sticking to the present system is that the Indian monsoon is a very important factor in budgetary projections.

Pointing out that agriculture still accounts for around 15% of the Indian economy, Bajaj said that a switchover to January would mean that the monsoon forecast and its consequent impact would not be available to policy makers.

“If you have January, we would not be able to gauge the prospects of the monsoon”, Bajaj said, adding that at this point of time, the Modi government has no plans to change this practice.

The United States government follows an October 1 to September 30 fiscal, while the Canadian government follows an April 1- March 31 year. Australia’s fiscal year starts on 1 July and ends on June 30. In Iran, the fiscal year usually starts on March 21 and concludes next March 20. Overall, the January 1 to December 31 calendar year is the most preferred globally, by governments and corporations.

In any case, a committee that last looked into this matter recommended that the government stick to the current fiscal year. The committee had been set up prior to 2004 by then Prime Minister Atal Behari Vajpayee had studied this matter extensively, before sticking to the tried and tested formula.

Incidentally, it is the BJP which is credited with doing away with colonial-era Budget practices. Finance Minister Yashwant Sinha brought forward the time of the Budget presentation to 11 a.m. instead of 5 p.m. in 1999. In 2017, finance minister Arun Jaitley changed the date of presentation to February 1 from the 28th of that month,

Indian corporations, government as well as private sector, also follow an April 1 to March 31 fiscal year.