Union Budget: History & Colonial Connection

We all know today that the Union Finance Minister Nirmala Sitharaman will be presenting the Union Budget for the financial year 2021-22 on coming Monday, February 1, 2021. At the same time, each one of us is thinking about the arsenals that she will carry to the Parliament in form of budget speech to drag out the Indian economy that was hit hard by the invisible enemy, COVID-19. To be true everyone from a common man to an industrialist to an investor who invests either in the share market or acts as an angel investor for Startups have their expectations.

But, we at Hans India would like to inform you something about the history of the Union Budget, which is a financial statement of the government's estimated revenue and expenditure for a particular financial year. Union Budget - also referred to as the Annual Financial Statement – is mentioned under Article 112 of the Indian Constitution. A financial year starts in India on April 1 of a particular and ends on March 31 of the next year and the budget is prepared for the same period. The Union Budget is classified into (a) revenue budget and (b) capital budget.

Here is a brief history of Union Budget

April 7, 1860, was the day when India's first budget was introduced from East-India Company to the British Crown. It was presented by the then Finance Minister of the Indian Council, James Wilson on February 18, 1869. Interestingly, India first budget was presented when India was under British colonial rule.

First Union Budget of Independent India

The first Union Budget of Independent India was presented by RK Shanmugham Chetty, on November 26, 1947. Total revenues stood at Rs 171.15 crore, and the fiscal deficit was Rs 24.59 crore. The total expenditure was estimated at Rs 197.29 crore with Defense expenditure at Rs 92.74 crore. Notably, the first Union Budget was presented amidst widespread riots due to the partition of India.

The first budget of independent India was meant for just seven and a half months after which the next budget was implemented from April 1, 1948.

This budget was followed by the budget that was presented by Chetty's successor John Mathai who presented the subsequent Union Budgets of 1949-50 and 1950-51. Interestingly, the Budget of 1949-50, was the first budget for United India, which also included all the princely states. It also included the financial statements for the former Princely States. This is a budget that has talked about the formation of the Planning Commission and five-year plans.

Budget's Colonial Connection

The budget has a colonial connection as it followed the UK Budget in many ways, like timings in which it used to be held at 5:30 pm, which was noon in the UK. Until the year 1999, the Union Budget was announced at 5:00 pm on the last working day of the month of February. This practice was inherited from the Colonial Era.

Another reason was that until the 1990s, all that budgets seem to do was to raise taxes, a presentation in the evening gave producers and the tax collecting agencies the night to work out the change in prices. It was Yashwant Sinha, the then Finance Minister of India in the NDA government (led by Bharatiya Janata Party) of Atal Bihari Vajpayee, who changed the ritual by announcing the 1999 Union Budget at 11 am, the tradition started from 2001.

Interestingly, until 2016, the Union Budget was presented on the last working day of February by the Finance Minister in the Parliament. But, it was 2017-18 when the day for the presentation of the Union Budget was shifted from the end of February to the first day of February. It was also the year when the Railway Budget was integrated with the Union Budget.

Who presented the Budget Maximum Times?

As of September 2017, Morarji Desai has presented 10 budgets which is the highest count. This is followed by P Chidambaram's 9 and Pranab Mukherjee's 8. Yashwant Sinha, Yashwantrao Chavan and C.D. Deshmukh have presented 7 budgets each while Manmohan Singh and T.T. Krishnamachari have presented 6 budgets.