SUMMARY RECORD OF DISCUSSIONS OF THE NATIONAL DEVELOPMENT COUNCIL (NDC) MEETINGS Five Decades of Nation Building (Fifty NDC Meetings) Vol - III (26th to 35th Meetings) GOVERNMENT OF INDIA PLANNING COMMISSION Please Note: Every effort has been made to ensure that the contents of this publication, which has been compiled for making available at one place the Record of Discussions of fifty Meetings of the National Development Council, are as accurate as possible. However, considering that this voluminous publication has been brought out from the Records, some of which are very old, users are requested to refer to the original text in case of any doubt/dispute. CONTENTS 26th Meeting of NDC ...................................................................................................... 1 27th Meeting of NDC .................................................................................................... 41 28th Meeting of NDC .................................................................................................... 67 29th Meeting of NDC .................................................................................................. 111 30th Meeting of NDC .................................................................................................. 145 31st Meeting of NDC................................................................................................... 199 32nd Meeting of NDC ................................................................................................. 235 33rd Meeting of NDC .................................................................................................. 277 34th Meeting of NDC .................................................................................................. 381 35th Meeting of NDC .................................................................................................. 431 TWENTYSIXTH MEETING OF THE NATIONAL DEVELOPMENT COUNCIL APRIL 19 AND 20, 1969 SUMMARY RECORD GOVERNMENT OF INDIA PLANNING COMMISSION Twenty Sixth NDC Meeting SUMMARY RECORD OF THE TWENTYSIXTH MEETING OF THE NATIONAL DEVELOPMENT COUNCIL AGENDA PAPERS *ITEM I — Draft Fourth Five Year Plan *ITEM II — Reports of the Working Groups on Identification of Backward Areas and on Fiscal and Financial Incentives. ITEM III — Change in Financial Year The question of a change in the present Financial Year has been considered a number of times in the past. More recently, a Study Team of the Administrative Reforms Commission went in detail into this question and after considering the various alternatives and after discussions with all concerned, including the representatives of State Governments, recommended as follows: "The alternatives are several and the criteria to be applied many. The conclusion one may reach is, in the last analysis, a matter of priorities. Should the accent be on the efficacy of performance or the accuracy of revenue budgeting ? On the convenience of legislators or the accuracy of expenditure estimation ? Since no one solution reconciles all these, what particular balance of advantage should be regarded as justifying a disturbance of the status quo with its attendant disadvantages ? We have considered these questions and feel that, if the status quo is to be changed, the balance of advantage would lie in favour of 1st October, more especially from the point of view of performance on which we lay emphasis throughout this report." The Administrative Reforms Commission which went into this matter further, made a somewhat different recommendation as follows: "The Financial Year starting from the 1st of April is not based on the customs and needs of our Nation. Our economy is still predominantly agricultural and is dependent on the behaviour of the principal monsoon. A realistic financial year should enable a correct assessment of revenue, should also synchronize with a maximum continuous spell of the working season and facilitate an even spread of expenditure. For centuries, people in India have become accustomed to commence their Financial Year on the DIWALI day. This practice has its roots in their way of life. The business community and other sectors of society start on the DIWALI day with the feeling that they have finished with the old period of activity and have embarked upon a new one. It is, therefore, appropriate that the commencement of the Financial Year should be related to DIWALI and, in order to prescribe it in terms of fixed date, we have recommended that the 1st of November should begin the Financial Year." The main considerations which weighed with the Commission in making their recommendation as stated by them in their report are reproduced in the Annexure. *These documents have been published separately. 1 Summary Record of Discussions of the NDC Meetings 2. A reference to the report of the Study Team of the ARC shows that the representatives of the various States who appeared before it held widely differing views in the matter of change in Financial Year—some favoured the status quo, some suggested a change to 1st July, some others to 1st October and a few to 1st January. Since it is necessary that there should continue to be a uniform Financial Year both at the Centre and in the States it would be desirable to arrive at a consensus in the matter of the change in Financial Year. 3. The various alternatives, apart from the status quo, and their pros and cons are briefly discussed below, with particular reference to the following : (a) Need to take into account the behaviour of the principal monsoon and the crop prospects before finalising the Budget. (b) Desirability of having a continuous spell of the working season or as much of it as possible within a single Financial Year. (c) Suitability from the point of view of legislators' convenience as also Election Schedule, and (d) Other relevant considerations e.g. changes in taxation laws etc. 4. 1st October—The Study Team of the ARC, as mentioned earlier, favoured this date more especially from the point of view of efficacy of performance. A perusal of their report shows that this date has also been favoured from the points of view of accuracy of estimation of resources and expenditures and convenience of Legislators; it is also seen that at least three States favoured this date. The consideration of accuracy of estimates arises from the ability to forecast realistically the factors which will influence the budgetary position in the following year with reference to the likely agricultural position in that year. There can be no two opinions about the importance of agriculture in Indian economy and considering the extent to which Indian agriculture depends on the monsoon, it would appear that from this angle a Financial Year commencing shortly after the principal monsoon should be convenient. The following points have, however, to be taken into account: (i) All the States do not have the same principal monsoon. However in this, overall considerations and what is applicable to the country as a whole will necessarily have to be the basis. From this angle, the South-West monsoon and the Kharif are admittedly the principal monsoon and crop respectively for the country as a whole. (ii) The South-West monsoon generally withdraws in September but the September rains are vital for the crops. A view as to the implications of the last monsoon and the prospects of the Kharif will therefore be possible in October only. (iii) Some time has to be allowed for the preparation of the Budget and the mechanical processes of compilation, printing etc. This should ordinarily take at least a month and in addition at least another month has to be allowed for passing the Budget. In fact the latter should be two months if the full Budget is to be got passed before the commencement of the Financial Year. 2 Twenty Sixth NDC Meeting Against the above background, a Financial Year commencing on 1st October would not be suitable from the point of view of realistic estimation after taking into account the crop prospects. From the working season point of view, a Financial Year commencing on 1st October would certainly be very suitable as it would enable the entire working season (at least in most of the States) to fall within the same Financial Year instead of two as at present. It is of course a moot point whether the existing arrangement affects the smooth progress of work and whether by suitable administrative action this cannot be remedied. This question would assume importance especially if a Year commencing on a date other than 1st October (or 1st July) is ultimately preferred. From the point of view of Legislators' convenience, a Financial Year commencing on 1st October would be suitable as it is likely to leave more time to the Legislators to tour their constituencies in the fair season. For example, at the Centre, the Budget Session would last from July/August to October/November, the other two shorter sessions being held in December-January and March-April. In an Election Year also, this Schedule will not be upset. From the angle of taxation laws, the fact that consequent on a change in the Financial Year, the laws will have to undergo a change on the basis of a new assessment year, including a transitional year, will have to be kept in view. With a Financial Year commencing on 1st October, the interval between the close of the assessees’ accounting year and of the Financial Year will be very long for those making up their accounts for the calendar year or the Diwali Year. Even those following the existing