How was independent Indias first Budget: Unveiling the financial history
Independent India's first budget was presented by R.K. Shanmukham Chetty on November 26, 1947. Amidst partition's turmoil, this deficit budget, with a revenue of Rs 171.15 crore, laid the nation's financial groundwork. It offers a stark contrast to today's economy, highlighting the nascent country's fiscal realities, initial priorities, and significant defense spending challenges.
New Delhi: The general budget of the country is going to be presented in Parliament on 1 February 2025. Amidst the noise ahead of the budget, have you ever wondered what was the condition of the country's vault when India became independent? Today, when we talk about the trillion dollar economy, it is difficult to believe how small the first budget of independent India was. In this article, we take you through the pages of history to the time when the ledger was first written for independent India.
Under Article 112 of the Indian Constitution, it is called the 'Annual Financial Statement', which contains a complete account of the income and expenditure of the government. But the tradition of budgeting in India began long before independence. India's first budget was presented on 7th April 1860 during British rule. At that time it was introduced by James Wilson.
Economic Challenges and the 1947 Union Budget
However, the moment we were waiting for came in 1947. On the 15th of August, the country became independent and exactly three months later, on 26 November 1947, the first Union Budget of independent India was presented in the Parliament. Then finance minister Sir RK Shanmukham Chetty presented the country’s first Budget. The budget was prepared for seven and a half months (15th August 1947 to 31st March 1948).
At that time the country was going through the pain of partition and communal riots broke out everywhere. Managing the country's economy in such a delicate and tense environment was a big challenge.
One of the most interesting things about this budget was that despite Pakistan becoming a separate country, it was decided that by September 1948, India and Pakistan would share the same currency (currency). Later, after the resignation of Sir Chetty, John Mathai assumed the post of Finance Minister and presented the budget of 1949-50, which was actually the budget of a united India made up of all the princely states.
India First Budget: Total revenue was Rs 171.15 crore
Now, let's move on to those figures, which will surprise you in today's era. In a country where projects worth thousands of crores are common today, the total revenue estimate (Revenue Estimate) of the first budget of independent India was only Rs 171.15 million. At the same time, the total expenditure of the government was estimated at around Rs 197.29 crore.
Accordingly, the country's first budget was a deficit budget, in which the fiscal deficit was about 24.59 million rupees. Since the security of the country was the biggest issue immediately after independence, a large part of the budget was spent on the army and defence. According to the data, the defence allocation was 92.74 million rupees, which was about 46 to 50 percent of the total expenditure.