On this 7th of November, a section of the press in India had reported that the Government of India is considering moving away from the antiquated cash accounting system to an accrual based system. In an article entitled “New accounting prices Taj at Re 1″, the reporters unfortunately did not give any authentic source to this revelation.
In an essay that I had wriiten on 1st February 2007 “What is our real fiscal deficit?“ I mentioned ” For a start, what is sauce for the goose is not sauce for the gander? What is considered acceptable and permissible accounting for the Government of India is no good for tax-paying citizens and companies. If citizens or corporates were to follow what the government has managed to get away with, namely a peculiar and antiquated accounting and reporting regime, many of them could find themselves behind bars. What is passed off as financial statements by the government in its budgets is nothing but a simple account of cash receipts and payments that does not even follow the ancient Bahi-khata rules, or the original Arthashatra disclosures. It is an incomprehensible set of numbers, collectively referred to as Financial Statements that produces at the end a figure keenly debated nationwide as the fiscal deficit. What is our real fiscal deficit? No one really knows.“
I sincerely wish that this 7th November newspaper report is correct. It will take years before we all can see a full set of financial statements of the Government of India and eventually determine our real fiscal deficit and also whether the Indian Railways was infact profitable.