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Imagine a nation as a colossal ship, its economy the vast ocean it sails on. The union budget? It is the compass guiding this ship, the blueprint of its journey. This critical financial statement, presented annually, is more than just numbers and figures.
It reflects a country’s aspirations, its path to development, and a tool to sculpt its economic landscape.
Today, embark on a fascinating journey to explore the history of the Indian union budget. From its beginnings to the landmark budgets that have shaped India’s fiscal history, this article recounts the fiscal saga that has shaped the world’s fastest-growing major economy.
So, buckle up as this article dives into the riveting world of India’s union budget history.
The genesis of the union budget
The term “union budget” is frequently mentioned, but what does it encompass?
At its core, a budget is a financial plan, a roadmap of sorts, that outlines the government’s projected revenues, expenses, assets, liabilities, and cash flows for a specific period.
It is like a fiscal compass, guiding a nation’s economic journey. The concept of a budget is not new. It traces its roots back to England around 1760. But when did this practice make its way to India? The history of budget in India began on April 7, 1860.
Who introduced the budget in India? A politician and economist hailing from Scotland, James Wilson served for the East India Company. It was with his budget introduction that the union budget was born, laying the framework for India’s fiscal journey. This marked a new economic era in India, setting the stage for the union budget.
The first budget of India
When was the first budget presented in India? The dawn of independent India marked a significant milestone in the history of budget. November 26, 1947, was the date of R.K. Shanmukham Chetty’s presentation of the first budget of India following independence.
This marked the country’s newfound sovereignty and the start of economic independence.
The inaugural budget had relatively low figures compared to today, with total revenues of ₹171.15 crore and a fiscal deficit of ₹24.59 crore. But the numbers only tell part of the story. The circumstances surrounding its introduction were far from ordinary.
Fresh off the heels of independence, the nation urgently needed to establish a robust financial framework. This first budget set the stage for future fiscal policies and economic growth.
The evolution of the Indian budget
The Indian budget, a cornerstone of the nation’s economic framework, has undergone significant transformations since its inception. A few of the milestones are:
- 1951: The introduction of the Planning Commission marked a strategic shift towards planned economic growth.
- 1957: The introduction of the wealth tax was a significant fiscal reform.
- 1968: Excise duty reforms were introduced, marking a major change in the budgetary process.
- 1987: The implementation of the Minimum Alternate Tax (MAT) was another pivotal moment in Indian budget history.
- 1991: Liberalisation, privatisation, and globalisation were all proclaimed in Manmohan Singh’s historic 1991 budget.
- 1999: Yashwant Sinha, who was the finance minister at the time, moved the budget presentation to 11 in the morning.
- 2017: On February 1, Arun Jaitley broke with the tradition that dates back to the colonial era and began presenting the union budget.
- 2021: For the first time in independent India, the 2021–22 budget was prepared entirely digitally due to the COVID-19 pandemic.
Significant budgets in Indian history
The blueprint for the establishment of the Planning Commission was laid out in the 1950 budget by John Mathai. The development of the country’s infrastructure relied heavily on this organisation.
With the introduction of an import licencing system, T.T. Krishnamachari’s 1957 budget imposed stringent limitations on imports. To further safeguard exporters from payment risk, it established an export risk insurance corporation. Due to import restrictions and high taxes, raising funds to pay off foreign debt became harder.
Morarji Desai’s 1968 budget eliminated the excise department stamping and assessing goods at factory gates. It instituted a system of self-evaluation that is still in use today among manufacturers of all sizes. The production was greatly enhanced by this significant procedure relaxation.
There was a sea change in Indian economic policy with Yashwantrao B. Chavan’s 1973 budget. This budget promoted self-sufficiency through higher employment, lower income inequality, and savings incentives.
The union budget of India, a critical financial statement, has been a guiding force in the nation’s economic journey. The budget has shaped India’s fiscal policies and economy since its colonial beginnings and post-independence changes.
The epochal 1991 budget heralded a new era of liberalisation, privatisation, and globalisation. The Indian budget’s journey demonstrates the country’s ability to adapt and persevere in unpredictable global economic situations. It continues to evolve, reflecting the aspirations of one of the world’s fastest-growing major economies.
While India was still a colony of the United Kingdom, its first budget was presented on April 7, 1860. It was introduced by James Wilson, who was India’s finance minister at the time. In his inaugural year as India’s finance minister, Sir R.K. introduced the country’s first union budget.
On November 26th, 1947, the first budget of independent India was presented by K. Shanmukham Chetty. In 1860, before India gained its independence, the country’s first budget was proposed by British economist James Wilson.
Moving ahead to the period following independence, RK Shanmukham Chetty presented the initial budget on November 26, 1947. The first budget for independent India was unveiled by Chetty, a legal luminary and financial guru.
The annual financial statement. The union budget, sometimes called the annual financial statement, is a document outlining the anticipated revenue and expenditures of the government for a specific year. It is required by Article 112 of the Indian Constitution.
Due to India’s status as a Union of States, the phrase “Union Budget” gained prominence. The federal system of government in India was established by the Constitution of India. For that reason, it is known as the Union of States.