Several media reports on Monday said that the next union budget might be moved forward to January instead of the last day of February it is traditionally presented on. If this indeed happens, it will bring to an end another legacy of the British Raj.
Speculation is also rife that a separate railway budget, another practice from the British era, might also be done away with, and clubbed with the main union budget.
The rationale behind the likely change in dates is simple. At present, the budgetary exercise typically gets over by May, after Parliament has approved the proposals. Government departments, therefore, typically have to wait until May for fresh infusion of funds. If the budget is brought forward, the government hopes that it will be able to secure all the necessary approvals before 31 March, thereby, allowing its various wings to begin utilising funds from 1 April.
Until the year 2000, the union budget was presented at 5 pm, again, in keeping with a British tradition. The previous National Democratic Alliance government led by Atal Behari Vajpayee changed that, and the finance minister now begins his budget speech at 11 am.
This likely change in the date of the presentation comes even as a government panel is reviewing the financial year. In India, the financial year runs from April to March. Moreover, the government is hoping that the Goods and Services Tax (GST) may also be implemented from 1 April 2017.
While a change in the timing of the presentation of the budget might appear nominal, it could lead to sweeping changes in the entire budget making procedure and the legislative process that follows it. In fact, if the change is affected from this year itself, the coming winter could see some really hectic budget activity.
Here’s what might change:
1. Pre-budget consultations: Typically, these parleys with various stakeholders including government departments, industry lobbies, and think tanks, among others, begin around December, for a February budget. If the date of the budget is indeed advanced, pre-budget consultations might need to begin by October itself. Effectively, this will mean that various interest groups will have to be ready with their proposals in real quick time.
2. Parliamentary approval: Typically, the Appropriation Bill and the Finance Bill, the two key legislations that make up the union budget, are passed by sometime in May. Because of this, the government takes Parliament’s approval for a Vote on Account, to tide over the two-to-three-month period, till the budget is passed. If the budget exercise is brought forward by a month, the government can complete this legislative business by the end of March itself and a Vote on Account may not be required.
3. Corporate India: The new arrangement will allow companies get more time in working out their advance tax payment schedules, depending on the corporate tax proposals in the budget
4. Individual taxpayers: will get an extra month to plan their investments in the coming financial year, depending on the direct tax proposals and exemptions outlined in the budget
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