Union Budget in January end? Pros and cons


The proposal for a change in the budget presentation date was first mooted by some of the govt’s senior most bureaucratsThe Finance Ministry is considering a proposal to advance the budget presentation date to January from the current norm of end-February. The idea behind this move is to ensure that the Finance Bill is passed before the start of the fiscal year on April 1 so that all central government departments get their full allocations to work with right from the first day.

It should be kept in mind that this proposal is different from that of whether the financial year of April 1-March 31 needs to be changed or not. A government appointed committee is looking into that matter.

The proposal for a change in the budget presentation date was first mooted by some of the government’s senior most bureaucrats as part of a ‘Transforming India’ initiative in January 2016.
Presenting the budget earlier comes with both advantages and disadvantages.


In the existing system, the Lok Sabha passes a vote on account for the April-June quarter, under which departments are provided a sixth of their total allocation for the year. This is done by March. The Finance Bill is not passed before late April or early May. If the Budget is read in January and passed by February-March, it would enable the government to do away with a vote on account for the first three months of a financial year

Retired and serving officials say the biggest plus would be that the Finance Bill, incorporating the Budget proposals, could be passed by February or March. So, government departments, agencies and state-owned companies would know their allocations right from April 1, when the financial year begins.

It would also help the private sector to anticipate government procurement trends and evolve their business plans. And, civil society could deliberate on and give feedback in time for the parliamentary discussions.


However, one big disadvantage of advancing the Budget preparations is lack of comprehensive revenue and expenditure data. Currently, work on the Budget begins in earnest by December. By the time it is finalised in mid-February, data on revenue collections and expenditure trends is available for the first nine months of the financial year, i.e April-December. Based on which, projections for the full year can be made.

To read the Budget in January, the centre will have to start preparing it by early October. To go by less than six months of data and making projections for the full year and the next year, based on such an incomplete picture, will be an impossible task.

Advancing the Budget dates would be fraught with practical difficulties. Effective Budget planning also depends on the monsoon forecasts for the coming year, making the advancing the whole exercise even more difficult.

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