India’s journey of financial governance is a fascinating tale of self sustenance, innovation, and transformation. From the colonial-era budgets that laid the groundwork for economic systems to the first budget of an independent nation which had the scars of Partition, the story of India’s budgets has its own evolving identity.
The First Budget: A Colonial Blueprint: The concept of a formal budget in India was introduced during British rule, with the first-ever budget presented on February 18, 1860, by James Wilson, a Scottish economist and businessman. He was appointed by Lord Canning, the then Governor-General of India, Wilson was tasked with stabilizing the economy after the upheaval of the Revolt of 1857.
Wilson’s budget introduced income tax a move which aimed at generating revenue for the colonial administration. Beyond taxation, he proposed financial reforms to improve transparency and streamline revenue management. However, Wilson’s tenure was cut short. He passed away in August 1860, leaving behind a vision that was only partially realised. Despite the challenges, his contributions remain a keystone of India’s economic history.
First Budget of Independent India: With independence in 1947, India faced the herculean task of rebuilding its economy. The first budget of independent India was presented on November 26, 1947, by R.K. Shanmukham Chetty, the country’s first Finance Minister. This budget presented in the shadow of Partition, the budget addressed pressing issues like mass migration, refugee rehabilitation, and resource constraints. Covering a period of seven months (from August 15, 1947, to March 31, 1948), it estimated revenues of ₹171.15 crore and expenditures of ₹197.29 crore, resulting in a fiscal deficit of ₹26.14 crore. Chetty also introduced the term ‘Interim Budget’, a concept that became a part of India’s budgetary process mostly among the states.
Chetty’s tenure, however, was brief. He resigned in 1948, paving the way for John Mathai, who presented the next two Union Budgets. Despite the short stint, Chetty’s budget set the tone for India’s economic planning for the economist and the finance ministry.
The evolution of India’s budgets—from Wilson’s colonial-era reforms to Chetty’s post-independence vision—laid the groundwork for a self reliant economy. The colonial roots of James Wilson’s reforms to the post-independence vision of Shanmukham Chetty, each budget has played a crucial role in shaping India’s economy.
