Financial Year Azadi from British Raj …. ?
Why does financial year begin on 1st April and not on 1st January? Logical and age-old question that every newbie in the world of Indian Finance has asked during their school days. And the answer has no rocket science behind it but this is just farewell gift to us from British colonial rule.
Prime Minister Narendra Modi recently raised the same question and ended up setting a committee in response to it.
Is it time for us to get Azadi from British Financial Year Rule?
Answer to this question is not as easy as to tear up a page or strike off a date on the calendar. This change requires some deep-diving around our fiscal policies, agriculture cycle and the king of all – statistics. And this is exactly what this committee has to figure out. In exact words, this committee will study the “feasibility and desirability” of this proposal and come up with a recommendation and due reasoning behind it. The committee will submit its report by end of this year analyzing pros and cons of shifting our financial year to some other cycle.
Trahimam … Trahimam … (Help … Help…)
It is an interesting proposal; however it’s equally important to measure the impact of this change on different industries. Changes as big as this are not so straight forward to implement and therefore, the committee has not been asked just for a recommendation but also impact analysis of their recommendation on different pillars of our economy. If adopted, this could lead to a possibility of amending other laws of the land which help us keeping our economy in shape. So yes, think before you commit is the underlying message.
Such a simple question …. What took us so long to answer?
Yes … we have done this before. And this proposal had already been analyzed in 1984. At that time, all quarter beginnings were considered for the start of a new fiscal year ie. 1st Jan, 1st Apr, 1st July & 1st October. After in-depth analysis, it was recommended to bring both calendar and fiscal year in line with each other. However, this change was not enacted at that time as it was too big a change to adapt. And the government decided that we were not prepared for it.
Let us see if this time also we will only analyze and not enact or if we are actually looking towards British Rule se Azadi.