The government on Wednesday constituted a committee headed by Shankar Acharya, former chief economic adviser, to examine the desirability and feasibility of having 'a new financial year'.
India follows the 1 April- 31 March fiscal cycle, but many countries and multinational companies follow the calendar year (1 January- 31 December).
India can also change the financial year to coincide with the start of its own cropping / harvest season.
''Factors such as the monsoons can also be dealt with more effectively if the financial year starts early,'' finance ministry officials told reporters, adding that such a move could help in more effective implementation of policies and budget announcements.
The Acharya Committee will take into account factors such as the correct estimation of receipts and expenditure of the centre and states, the effect of the different crop periods, the relationship between the financial year and the working season, the impact on businesses, statistics and taxation, and the timeline for Budget-making by the legislature.
''In case a change in financial year is recommended, the committee has also been asked to work on the modalities of effecting the change,'' the ministry said.
In 1867, the British had set India's financial year from April to March, to align it with its own fiscal cycle.
In 1984, the LK Jha Committee had recommended that the financial year should start from January mainly considering the impact of the South-West monsoon on the economy.
The Acharya Committee will examine the merits and demerits of various dates for the commencement of the financial year, including the existing date (April to March), taking into account the various relevant factors.
Details on the composition and the terms of reference of the committee are uploaded on the website of ministry of finance (www.finmin.nic.in).
The committee has KM Chandrasekhar (former cabinet secretary), PV Rajaraman (former finance secretary of Tamil Nadu) and Rajiv Kumar (senior fellow at the Centre for Policy Research) as other members.
The committee has been given time till 31 December 2016 to submit its report.