Learning This Week: The Union Budget
Every week I learn something interesting about a topic.
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Historical Perspective
Pre-Independence Era
The first Indian budget was presented in 1869 by James Wilson, a member of the British Parliament. It primarily served colonial interests.
Post-Independence Era
The first Union Budget of independent India was presented by R.K. Shanmukham Chetty on November 26, 1947, covering the period from August 15, 1947, to March 31, 1948. This budget focused on post-partition reconstruction and defence, allocating ₹92.74 crs (46% of total expenditure) to defence.
Key Landmarks in Budget History
1957-58: The introduction of wealth tax by T.T. Krishnamachari marked a shift in taxation policy.
1973-74 (Black Budget): Fiscal deficit reached ₹550 crore due to financial distress.
1986 (Carrot & Stick Budget): V.P. Singh introduced MODVAT (Modified Value Added Tax) to reduce cascading taxes and crack down on tax evasion.
1991 (Epochal Budget): Perhaps the most famous budget in Indian financial history. Presented by Manmohan Singh under P.V. Narasimha Rao's leadership, it liberalized the economy, reduced import duties from over 300% to 50%, and marked the end of the License Raj.
1997 (Dream Budget): P. Chidambaram significantly reduced personal and corporate tax rates, simplifying taxation and boosting compliance.
2000-01: Yashwant Sinha's budget boosted the IT sector by reducing customs duties on computers and peripherals.
2017: Arun Jaitley merged the Railway Budget with the Union Budget after 92 years, streamlining the process.
Evolution of Key Metrics
Over the decades, India's economic landscape has transformed dramatically:
Economic Milestones:
GDP growth accelerated post-liberalization in 1991.
Per capita income rose from ₹10,000 in the early 2000s to ₹1.97 lakh by 2023.
Tax reforms like GST (introduced in 2017) streamlined indirect taxation and enhanced compliance.
Conclusion
The Indian Union Budget reflects the nation's socio-economic priorities and challenges across eras—from reconstruction post-independence to liberalization in the 1990s and infrastructure development today. Landmark budgets such as those in 1991 and 2017 have profoundly shaped India's economic trajectory.
Over time, fiscal policies have evolved to balance growth with sustainability while addressing pressing issues like poverty alleviation and infrastructure development.
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