The change of date in presentation of annual budget will bring in financial discipline and decolonise the tradition of presenting the budget in February
For decades, Union Budget referred to as Annual Financial Statement in Article 112 of the Constitution, has been presented to Parliament on the last day of February, coming into force with the beginning of new financial year on April 1 to next March 31 with entire exercise being completed by the month of May.
British conventions had been directly and indirectly influenced by the Roman Empire and we were too, affected by the same. Country’s first Budget was presented on April 7, 1860 by James Wilson, Finance Member of the Council of Viceroy of India. Then financial year commenced on May 1 and ended on April 30. It was seven years later in 1867;
that financial year was shifted to April 1 to March 31 to align with the financial year of Britain. However, first Budget of independent India was presented on Nov. 26, 1947 by the Finance Minister RK Shanmukham Chetty to make up for the remaining months of the financial year. Until the year 2000, Budget used to be read out at 5 PM on last day of Feb., again a legacy of pre-Independence era when British Parliament used to pass their Budget at noon followed by India’s, same evening. Since the year 2001 onward, Budget Speech has been read out at 11 AM on the last day of Feb. Date of Budget itself is a colonial practice as it was derived from Julian calendar, introduced by Roman Monarch Julius Caesar, practised till 1752. From 1155 to 1751, English calendar year of ten months, changed on every March 25, also date of presentation of Budget every year. In 1752, Britain adopted Gregorian calendar year from January 1 to December 31 but the budgetary exercise stuck to the same old date.
Budget presentation in India has been a two-stage process. First is presentation of Budget, followed by
discussions in Lok Sabha and Rajya Sabha, then Presidential approval with the entire exercise running well into middle of May. Second is
passing of Vote on Account to take care of federal expenses for the months of April and May as financial year starts on April 1 itself. Complete overhaul of the Budgetary process has been overdue and the exercise has been undertaken by the Government in right perspectives.
Overhaul of Budgetary exercise is also due owing to two important decisions taken recently — Merger of Railway Budget with the main Union Budget and adoption of Goods & Service Tax that will subsume Excise Duty and all other indirect levies.
In absence of any Constitutional mandate regarding date of presentation of Budget, advancing the date by a month shall not be a cumbersome exercise which otherwise used to run well into mid-May after Parliamentary and Presidential approvals. Government shall no more be constrained to seek approval for Vote on Account from Parliament to carry on with expenditures for the months of April and May before complete Budget is finally passed as it shall turn redundant. Once this decision is adopted, entire pre-Budget exercise shall be advanced from December to September, including brainstorming sessions with all stake-holders, and
presentation of Economic Survey Report etc.
With incorporation of aforesaid overhaul, Budget is likely to be much lighter and slimmer in content with lot of
proposals/legislations of Part B of Budget going into history. Also, 92 year old practice of presenting separate Railway Budget comes to an end with this budgetary overhaul. Then Railway Tariff shall be responsibility of the Finance Minister while detailed Railway proposals of new trains and lines shall constitute Annexures.
Committee has already been constituted under Chairmanship of Shankar Acharya to examine feasibility of having a new financial year and the report is expected by December end. The Committee is seized with the issue of pros and cons of various dates of commencement of a
financial year to be adopted with effect from next financial year. Earlier, LK Jha Committee had deliberated over the issue and recommended switching over to January-December calendar year which was rejected citing enormous
inconvenience caused to corporate bodies.
There is also a view that this is an opportune time to introduce Vikram Samvat calendar which is most
scientifically computed one based on migration of Naksatra-s with impeccable accuracy. In any case, initial hiccups during transition phase are bound to be there, which can be easily ironed out with a systematic plan for a couple of years.
(The writer is a senior columnist and writes on Economy and Market Trends)