The word "budget" is derived from the Middle English bouget meaning a wallet that in turn comes from the Old French bougette, a leather bag. But like many English words, it has become part of the Indian lexicon and whether it is Hindi or any of the regional languages, budget is bajat.

The Union budget was always presented at 5 p.m. That was an imperial legacy but typically we invented an Indian reason-this is a time when the stock markets are closed. Five o'clock here corresponds to 11.30 a.m. in London when the accounts for India used to be presented in the House of Commons. Yashwant Sinha made a welcome break with this hangover in February 1999. But another colonial practice relating to the budget continues.

On February 28, Sinha will present the Union budget for the financial year 2002-3, that is for the period April 1, 2002 to March 31, 2003. This practice is a gift of the British. who decreed it way back in 1867 so as to be in conformity with their practices. Prior to 1867, the financial year began on May 1, going back over 450 years to the rule of the great Sher Shah Suri, who built the modern Grand Trunk Road linking Peshawar with Kolkata. His choice was linked to the end of the harvest season, April 14, the traditional Hindu New Year in many parts of India. Sher Shah, a largely overlooked figure in Indian history, also introduced the silver coin Rupayya, from which we get the word rupee.

Does it make sense to start a financial year in a monsoon-influenced country well before we have any knowledge of what the rain gods have in store for us? This question has agitated successive administrations for over a century now. Many committees have suggested a change. The historic Royal Commission on Indian Currency and Finance, 1914, chaired by Austen Chamberlain and of which John Maynard Keynes himself was a member, did so. So did the Administrative Reforms Commission of 1966.

Most recently, the Committee on Change in Financial Year chaired by the late L.K. Jha, one of India's distinguished economic administrators, submitted its report in April 1985 and was unequivocally in favour of a financial year starting on January 1. Its recommendations received strong support from a vast majority of the state governments and parliamentarians. But nothing happened thereafter and the committee's report was simply buried.

If three basic principles are accepted-that the calendar chosen must be Gregorian, the date chosen must be the first of a month and the year begins at the start of a generally accepted quarter-then a financial year could begin on January 1, April 1, July 1 or October 1. January 1 coincides with the start of the calendar year and by then the performance of both the south-west and north-east monsoons would be known and their impacts felt. July 1 coincides with the start of the agricultural and cooperative year, while October 1 would fall immediately after the withdrawal of the southwest monsoon.

In addition to the monsoon, the working season factor also has to be considered. Financial authorisations reach the field normally three months after they are made. With an April-March financial year, this means that money will reach in July and then for another three months, till September, works will not go full swing because of the rains. With a January-December financial year, this hiatus would still be six months-January to March and July to September-but the work season gets fragmented, though this can be taken care of by eliminating delays in expenditure authorisations. A July-June financial year can give an uninterrupted season of nine months but if this happens, legislatures will have to meet through the summer. This will be resisted. An October-September financial year will also have a working season of six months but the important last quarter, when the pressure to spend mounts, will be relatively slack.
The Royal Commission described the Indian budget as a gamble on the rains. Today, the economic influence of the monsoon may appear less dramatic. But even if all of India's irrigation potential is harnessed (presently about 40 per cent of cultivated area is irrigated), between one-third and two-fifths of cultivated area would still be rain-fed. And in the past few years, even with "normal" rainfall in the aggregate, agricultural output has been subject to substantial variations. Thus, a change in the financial year could have more than mere cosmetic value.

India's public finance system has collapsed. Not enough tax and non-tax revenues are being mobilised. There is too much expenditure in the wrong areas. Tax administration is very weak. Accounting procedures are outmoded. These are the priorities waiting to be tackled comprehensively in Part B of the Budget Speech. Unfortunately, Part A, over which the Finance Minister has little direct control, has become more important and the original meaning and significance of the budget has been lost. The nation is paying the price for
this shift.