Learning This Week: The history of Budgets
Every week I learn something interesting about a topic.
If you have not signed up for the free newsletter yet, consider doing so now at https://intelsense.substack.com
The history of budget-making for a country can be traced back to ancient times, but the modern concept of a government budget emerged in the 18th century in England.
It all started in England
As early as 1760, the Chancellor of the Exchequer in England began presenting the national budget to Parliament at the start of each fiscal year. The purpose was to curb the power of the monarch to levy taxes and control public spending. The budget was the Chancellor's report on national finances, including an accounting of past expenditures and estimates of future spending along with tax proposals.
The US wasn’t far behind
The first evidence of budgeting in the U.S. was an informal statement submitted by Alexander Hamilton in 1790. However, the first formal federal budget was not adopted until 1921. Many U.S. states and cities adopted budgets earlier, with 44 states enacting budget laws between 1911-1919.
Indian Budget
The Indian Budget was initially established on 7th April, 1860 under the East-India Company.
The first India-specific budget was presented by James Wilson on February 18, 1869. Wilson, a Scottish entrepreneur, economist, and Liberal politician, served as the Finance Member of the India Council, which provided financial advice to the Indian Viceroy. He was also the founder of The Economist and the Standard Chartered Bank.
Post-independence, R. K. Shanmukham Chetty presented the first Union Budget of independent India on November 26, 1947. The budget outlined a total expenditure of ₹197.39 crore, with significant allocations for defence.
India shifted towards a planned economy following the Soviet model and the Planning Commission was established in 1950. It was responsible for formulating five-year plans aimed at economic growth and development.
Personal Income Taxes in India
The highest personal income tax rate ever levied in India was 97.75%, applicable during the fiscal year 1974-75. This rate was part of a progressive tax structure that included various surcharges and was aimed at high-income earners.
In subsequent years, tax rates were gradually reduced. For instance, in the 1980s, the highest marginal rate was lowered to 61.875%, and further reforms in the 1990s led to a more moderate tax regime with a maximum rate of around 40% for higher-income levels.
DISCLAIMER:
Investments in the securities market are subject to market risks. Read all the related documents carefully before investing.
SEBI Registered Research Analyst -Â Cupressus Enterprises Pvt Ltd - INH000013828.
Registration granted by SEBI and certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.