Government looking to advance Union Budget presentation by a month
The government is planning to advance the Union Budget presentation by a month to January end from 2017. The budget is usually presented on the last working day of February, a month before the new financial year begins on April 1. The Shankaracharya committee, tasked to examine the feasibility of having a new FY has been asked to submit its report by 31 December.
Presentation of the Union Budget
The Constitution doesn't mandate a specific date for Budget presentation. Since the British-era, the budget has been presented on the last working day of February by means of a Finance Bill and an Appropriation bill, before coming into effect on April 1.
Government looking to advance Union Budget presentation by a month
The government is planning to advance the Union Budget presentation by a month to January end from 2017. The budget is usually presented on the last working day of February, a month before the new financial year begins on April 1. The Shankaracharya committee, tasked to examine the feasibility of having a new FY has been asked to submit its report by 31 December.
Changes in the legislative process
Currently, Parliament passes the budget through a two-stage process. A vote on account is passed in March whereas the finance bill, which contains tax changes and the demands and appropriation bill, are passed in May. This change will help to conclude the process by March so that the budget spending and tax proposals can start to happen from the beginning of the financial year.
Proposed changes in economic policy
The finance ministry is overhauling the Budget-making exercise which may see a merger of the Union and Railways Budget. Abolition of the distinction between Plan and non-Plan expenditure which will be replaced with capital and revenue expenditure. It will also not mention indirect tax proposals, making Union Budget a less bulky document, after excise duties, service tax and cesses are subsumed under the GST.
Benefits
Taxpayers will get 2 months to adjust personal finances and investments according to new tax provisions. Companies will get more time to start provisioning for advance taxes keeping in mind changes in corporate tax structure. Policy transmission will be faster and departments will be able to spend funds from the start of the year instead of waiting for money to be allocated in May.
Resistance faced
CPI's Gurudas Gupta said if the budget is presented in January, there will be overlapping of winter and budget sessions of Parliament which will create problems. An ex-chief economic adviser to the finance minister was quoted saying,"What is the point of a budget in January? Are we transitioning to calendar year as the fiscal year?". Congress too is not fully convinced with the idea.
Changes in the practice
The practice of Budget announcement at 5pm was inherited from pre-Independence era, when the British Parliament would pass the Budget first, followed by India in the evening. In 2001, the NDA government under Atal Bihari Vajpayee changed the ritual and presented the Budget at 11am.
