The Centre’s plan to change the financial year cycle from April-March to January-December has been put on hold and may not materialise in the Narendra Modi government’s current term, according to a senior official.
Any change in the financial year would have to be agreed upon by all states, and a number of them were still not in its favour, the official, who did not wish to be named, said on Monday. Besides, the government did not see many advantages in switching to the January-December cycle, the official added.
Surprisingly, changing the financial year has been one of Prime Minister Narendra Modi’s pet themes.
“A number of states are not on board with the idea. The financial year change has been put on the back burner,” the official said, adding that a final decision on the matter could be taken in 2019.
“Too many disruptions like the goods and services tax (GST) and lack of data are also hurdles in advancing the financial year,” the official said. The government, the official said, was also aware of the fact that general elections in 2019 might make the process more complicated.
Modi first talked about the financial year change in a governing council meeting of the NITI Aayog in April where all states participated.
He also directed states to take a lead on the same.
Madhya Pradesh became the first state in May to formally announce a shift to the January-December financial year from next year. Its current financial year will end in November. Union Finance Minister Arun Jaitley, too, announced in Parliament that the government was planning to switch to the January-December financial year.
There have been some conflicting voices emanating from the government so far. While some officials had earlier told Business Standard that a shift from April-March to January-December could happen as early as 2018, some others had said such a shift, with short-term disruptions, might not happen so soon after the implementation of the GST.
The Centre is studying the report of the Shankar Acharya committee, which was tasked with studying the implications of any such shift.
The panel’s report has not yet been made public but it is understood to have recommended against the change.
India has been following the April-March financial year since 1867, mainly to align the Indian financial year with that of the British government.