Cabinet actively considering advancing Union Budget by a month

According to the sources in the North Block, Prime Minister Narendra Modi backed Finance Ministry’s proposal of preponing Union budget by a month to January 31 and consolidating Union and Railway Budget. The government has also been trying to change the fiscal year period from 1-April to 31-March of the next year.

With this, the start of calendar year itself would see highest volatility with long ups and downs in the market in the form of traditionally on going pre-budget rally during the start and post Budget sell off.

The idea to advance the Budget announcement was to have a reasonable time gap between passing of Union Budget and start of the next fiscal year thereby to ensure finance bill is passed before the start of the fiscal year. The government itself, affiliated agencies and state run companies will get to know their work allocation from the beginning of the financial year itself. Private companies can follow the footsteps of the government trends and frame their strategies accordingly.

However, work of preparing the Budget starts in January and the revenues and expenditure trend is set according to the working of 9 months from April to December. On preponing the number by a month the trend will be set by just reviewing the performance of two quarters from April to September. The projections could be misled in this case.