Union Budget may be advanced by a month to 31 January
The finance ministry is doing an overhaul of the budget-making exercise to complete it before the beginning of the new fiscal on 1 April
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New Delhi: The finance ministry is considering a plan to advance the presentation of the Union budget by a month to 31 January instead of the usual practice of presenting it on the last working day of the following month.
This, the government hopes, will help initiate revenue mobilization and capital expenditure measures right from the beginning of the fiscal year.
“It is a proposal by the department of economic affairs which has been put before the finance minister Arun Jaitley for approval. It may also need consent of the Parliament secretariat,” a finance ministry official said, requesting anonymity.
If accepted, this could mean a second major shift in the schedule of the budget by a National Democratic Alliance (NDA) government.
The previous NDA government, under prime minister Atal Bihari Vajpayee in 2001, had changed the time of presenting the budget to 11am, from the British era practice of presenting it at 5pm.
It would also mean that the budget session of the Parliament may be advanced. Usually, the budget session begins in the last week of February and runs till mid-May with a recess in between. Both houses of Parliament clear the appropriation bill only in the second half of the budget session, forcing the government to seek Parliament’s approval through a vote on account in March to withdraw money from the consolidated fund of India for two to three months to meet regular expenditure.
Advancing the budget presentation day by a month will do away with the need for a vote on account, the official said. “It will help departments start spending the money allocated to them right from the beginning of the fiscal year instead of waiting for the budget to be passed by the Parliament. It will also help in resource mobilization as budget proposals can be implemented from 1 April,” he added.
N.R. Bhanumurthy, a professor at the National Institute of Public Finance and Policy, said the proposal might help government departments better manage their expenditure. “I don’t see any major gain in revenue generation,” he added.
The move could also help government prepare for the implementation of the goods and services tax (GST), scheduled to be rolled out from 1 April. At least 11 states, including those governed by the Bharatiya Janata Party (BJP) and opposition political parties, are in the process of ratifying the legislation after Parliament passed the constitutional amendment bill for the GST in the first week of August. This is over and above the three states—Assam, Bihar and Jharkhand—that have already done so. The bill needs the backing of at least 16 states before it can be sent for presidential assent.
However, the date of presentation of the budget may see another change after the Shankar Acharya committee, tasked to examine the desirability and feasibility of having a new fiscal year, submits its report. The finance ministry official cited earlier said the date of presenting the budget could be suitably adjusted after the report is submitted. “We are at present not prejudging the recommendation of the committee,” he added. The committee has been asked to submit its report by 31 December.
Currently, India follows the April-March fiscal year and all macroeconomic and company data, including the government’s budget, are compiled and prepared for the same period.
Most countries follow a January-December fiscal year.
A committee of secretaries headed by the cabinet secretary had earlier this year recommended changing the fiscal year to January-December.
The government is also planning to abolish the distinction between Plan and non-Plan expenditure from next fiscal year (2017-18) onwards as the 12th Five-Year Plan (2012-17) ends this fiscal, replacing it with capital expenditure and revenue expenditure to better differentiate between asset creating and government expenditure.
Next year’s budget could also see the abolition of the railway budget, with the finance ministry considering the proposal by railway minister Suresh Prabhu to subsume his separate departmental budget in the Union budget itself.