Andhra Pradesh, Telangana ready for Jan-Dec FY format; await Centre's nod

Madhya Pradesh was the first state to announce that it would implement the new FY format

Andhra Pradesh and Telangana along with Madhya Pradesh are waiting for a nod from the Centre to switch to the cycle of January-December financial year (FY) starting next calendar year.

Chief ministers of both the southern states have already instructed senior officials of the finance departments of their respective states for necessary steps to align to the new FY format whenever the Government of India decides to do so.

However, the Centre is yet to communicate to the states on whether they should start preparations to adopt the new cycle from next calendar year, in continuation with the suggestion made by Prime Minister Narendra Modi to chief ministers at NITI Aayog meeting in April.

"We are still waiting for a word from [the] Government of India in this regard to advance the schedule of [an] annual budget so that the state would be able to follow [the] January-December cycle from [the] next calendar year," K Ramakrishna Rao, principal finance secretary, Government of Telangana told Business Standard on Friday.

Rao, who heads the state finance department, has already visited Delhi and informed the Telangana government's intent and readiness to adopt the new financial year format from 2018, if the Centre decides to change its FY cycle accordingly.

The state government will have to start preparations in August-September if it plans to advance the budget presentation to November-December of 2017, according to Rao

The senior Indian Administrative Service (IAS) officer doesn't see any issues, or difficulties in changing to the new FY format either for the Centre or for the state from 2018 itself.

In the undivided Andhra Pradesh, the finance department used to start the budget preparation in January.Then the government used to present the budget in February and run the budget sessions for 30 working days ending March 30 with the passage of the appropriation bill. Post bifurcation, the two states have halved the number of days for a budget session, completing the process within March.

Meanwhile, officials of Andhra Pradesh finance department started internal deliberations for the advancement of budget presentation. According to sources, preparations would likely start from August first week on Chief Minister Nara Chandrababu Naidu's directions that the annual budget for 2018-19 should be presented towards the end of November in case the Centre decides to lead the way.

A final decision has not been taken yet, said a senior AP finance department official. "We are waiting for Government of India decision officially. We will do as it is done by them," the official told Business Standard.

Andhra Pradesh officials see convenience in following the Centre's footsteps as grants and devolutions are linked to the FY cycle.

If January is going to be a beginning month in the new FY, then the April-December 2017 period would be considered as a transitional FY, according to the Andhra Pradesh officials.

Madhya Pradesh (MP) was the first state to announce that it would implement the new FY format from this year itself. MP Chief Minister Shivraj Singh Chouhan has made this announcement just after the NITI Ayog meeting in April where the Prime Minister suggested the chief ministers consider the new FY format.

"Stating that in a country where agricultural income is exceedingly important, budgets should be prepared immediately after the receipt of agricultural incomes for the year... He (Modi) said there have been suggestions to have the financial year from January to December. He urged states to take the initiative in this regard," an official statement said on the Prime Minister's closing remarks at NITI Ayog's Governing Council meeting back in April.

After quickly endorsing the Centre's idea, the Telangana government even wanted to send a delegation of finance department officials to Madhya Pradesh last month to study the steps being taken by its counterpart in this regard.

However, the state officials deferred the visit after they were told by the MP officials that they were waiting for a word from Delhi to initiate the preparations.