India got independence 70 years back but parties like Congress did not let go of many British Era rules. Mentally they made us follow British culture even though we were an independent country. The Fiscal year from April to March is an example of this.
The History behind this goes back when Mughals ruled our country. They hardly bothered of public at large moved to cooler places on the onset of summers which starts mid March. Hence they shall lay out all taxation rules and finances by February so that they can enjoy summers in cool places. Akbar for example ruled from Lahore during summers. Jahangir also continued the tradition by ruling from Srinagar during summer months and would return to Agra only in July during Monsoons
Britishers carried forward this legacy. They invaded India but the hot temperature of Surat, Kolkatta and then Delhi was uncomfortable to them. So they moved to Shimla during months of summer after allocating budget expenses.
At the dawn of 1947 and post constitution Nehru dynasty never tried to question this tradition and kept the Fiscal year same.By mid-May New Delhi starts heating upto 40 degree celcius, thus giving chance to most Ministers and MPs of Central Govt and State Governments to commence their foreign tours after budget session during the May-June/July to Western cooler nations
while the rest of the nation runs dry taps from May to June or early July. Most of the MPs, Ministers and several committee members go on European or Western nation tours go for studying garbage collection in cities, handling of sewage and drainage problems in domestic and industrial places, studying effective and efficient safe public transportation in developed nations etc.
70 years have passed but no one bothered to check this tradition. Finally when the country is in right hands the tradition is going to change. FM Mr Arun Jaitley announced his intentions to change the year to January to December from 2018
Now how does it help? It is just a date isn't it?
No it is game changer. Here it is how?
India Monsoons start from Early May and last till September. Changing the Fiscal year means budget to be presented by November. Till date Budget had to presented with the help of weather department prediction on monsoon which is too difficult to predict by February
Rural India forms the backbone of Indian economy. Presenting Budget in November shall give exact figures of agriculture crops and allocation of expenses to agriculture and irrigation.
It shall also help FM to know the rise and fall of demand of consumer durables, auto sales and the
like as major demand for this comes from Rural areas. This shall help him decide various taxes and give stability to these companies.
As a Chartered Accountant I know how difficult it is for companies to make two financial statements . One as per Fiscal year for purpose of Income Tax and other to align accounts with foreign partners where in most cases the year is calendar year. It is a big relief for them
Further it may try to convince at global level to have a uniform financial year to save subsidiaries of foreign companies from duplicating work. As it requires to prepare financial statements and conduct audits twice in a year, first to comply with the foreign parent company and then for complying with local laws.
It also makes it difficult to match the international transactions leaving a big room for manipulation.
And most importantly, for Indians finalising accounts, conducting audits and complying with various tax laws would be more convenient during the period from "January to June" as compared to "April to September
"change in the financial year was required as the current system leads to suboptimal utilization of working season. It had also noted that the current financial year cycle was chosen without any reference to national culture and traditions or convenience of legislators. Also, the financial year is not aligned with international practices and it impacted data collection and dissemination from the perspective of national accounts" NITI AAYOG
However one more thing comes to my mind. I am not sure if it is right but this is another gamble played by Mr Modi
This affectively means the budget next year shall be in November and that shall be the last budget of this government. Although you may argue that budget in 2019 would have been also only a statement as elections shall be due but still he shall miss out on that
Also it can be a master stroke as delayed budget in November shall cover up any revenue loss in initial stage of GDP and he shall be able to carry on his development agenda till November as the last budget is always more populist than finance savvy.
My salute to Mr Narendra Modi, Entire financial Ministry and Mr Jaitley for always keeping development above populism.
Honestly I have no words. Surgical Strikes, Demonetisation, GST and now change in Fiscal year. All I can do is salute to this Government
INDIA SOON A WORLD POWER TO RECKON WITH