The word “Budget” was derived from the Middle English word “bowgette”, which came from Middle French “bougette—meaning a leather bag. The Indian budget is presented in Parliament on a date fixed by the President. The Budget speech of the finance minister is normally has two parts. Part A deals with general economic survey of the country while Part B relates to taxation proposals.
Finance Minister presents the annual Union Budget in the Parliament generally on the last working day of February. The Budget is the most extensive account of the Government finances, in which revenues from all sources and expenses of all activities undertaken are aggregated. It includes the revenue budget and the capital budget. It also comprises estimates for the next fiscal year called budgeted estimates. The Ministry of Finance, Planning Commission, Administrative Ministries and the Comptroller & Auditor General are the main players in the declaration of the Union Budget.
First Indian Budget
The Budget was first introduced in India on 7th April, 1860 from East-India Company to British Crown. The first Indian Budget was presented by James Wilson on February 18, 1869. Mr Wilson was the Finance Member of the India Council that advised the Indian Viceroy. He was Scottish businessman, economist and Liberal politician. He founded The Economist and the Standard Chartered Bank.
First FM was Sir RK Shanmukham Chetty
The first FM's post went to Sir RK Shanmukham Chetty, industrialist, erstwhile Diwan of Cochin state and Constitutional Adviser to the Chamber of Princes. He had been a member of the pro-British Justice Party. The first budget of Independent India was presented by Mr. Chetty on November 26, 1947, in the backdrop of partition and riots. Since then India has had as many 80 budgets.
Our Budget follows the UK Budget in many ways, including, for many years, timing, since it used to be held at 5:30 pm which was noon in the UK.
First budget of the Republic of India
Mr Chetty was succeeded by John Mathai. Mr Mathai in 1949-50 delivered the most lucid Budget Speech as he decided not to read out all the details telling members that a White Paper with all details was being circulated. He then gave a small lecture on inflation and economic policy. It was the first Budget for an actually united India, since it included the financial statements for former Princely States and where the biggest news was the news of forming of Planning Commission and the need for having five-year plans.
Mr Mathai replaced by CD Deshmukh
John Mathai was succeeded by CD Deshmukh. Mr. Deshmukh, the first Indian Governor of the Reserve Bank of India as well as the Finance Minister, presented an interim budget for 1951-52. The major concern of Mr Deshmukh was to find money for the Plans which meant higher taxes. In one Budget Speech he tried to buck up taxpayers with the story of a letter he claimed he had got from a villager who paid no taxes, but wanted to help.
Deshmukh said, "He has remitted a sum of Rs 5 to me and has promised to remit a similar sum every year... so long as the common run of our people can produce men and women with this spirit, this country can face the future, however difficult it may be, with confidence." It is not recorded if this made taxpayers happier to pay rather more than Rs 5.
Budget & foreign relations
Budgets don't deal with issues like foreign relations, yet some sign of India's tilt towards Russia can be seen in the Budgets of the 1950s. Foreign aid inflows to help the new nation were a major source of revenue, and at the start of the decade these were mostly from the US and UK.
Wealth tax & expenditure tax
TT Krishnamachari, who succeeded Mr Deshmukh, was an industrialist who, strangely enough, had a lot of enthusiasm for taxation. In 1957, he created two new levies, a wealth tax and an expenditure tax, and sternly told those who had to pay these to display some patriotic spirit: "I am one of those who also believe that the greatest advances towards economic equality and positive social improvement are made in difficult times when the conscience and the solidarity of a people are raised to the highest pitch." Krishnamachari as the finance minister during 1964-65 introduced the voluntary disclosure of concealed income scheme in India for the first time.
Jawaharlal Lal Nehru was the first prime minister to present the budget when he held the union finance minister portfolio in 1958-59.
Morarji Desai Budget
Morarji Desai relished levying taxes. In 1968 he said: "I now come to the much dreaded part of my Budget speech. I trust Honourable Members will not take me to task if the proposals do not fulfill the expectations of dread... A deficit of this kind is usually an invitation to an FM to sharpen his knife...I propose to engage myself essentially in a minor operation of plastic surgery-taking out a little flesh here and adding a little bit there." Morarji Desai has presented the maximum number of budgets so far—almost ten. They included five annual and one interim budget in the second tenure when he was both Finance Minister and Deputy Prime Minister. He presented annual budgets for each year from 1959-60 to 1963-64 and the interim budget for 1962-63. The annual budgets for three years between 1967-68 and 1969-70 and the interim budget for 1967-68 were also presented by Morarji Desai.
Concessions for poor
V.P. Singh as finance minister dwelt excessively on concessions for poor. In his 1986 budget he proposed railway porters, bank loans with a subsidy for rickshaw pullers, cobblers and setting up of a small industries development bank, an accident insurance scheme for municipal sweepers.
Jawaharlal Lal Nehru, Indira and Rajiv Gandhi have presented the budget while serving as the Prime Minister of India. Corporate tax (today is known as Minimum Alternate Tax) was first introduced by Rajiv Gandhi in 1987 Budget.
Manmohan Singh's role in Budget
Manmohan Singh in his first Budget Speech of 1991 he made some personal remarks that recalled his own history: "I was born in a poor family in a chronically drought prone village which is now part of Pakistan. University scholarships and grants made it possible for me to go to college in India as well as in England. This country has honoured me by appointing me to some of the most important public offices of our sovereign Republic. This is a debt which I can never be able to fully repay. The best I can do is to pledge myself to serve our country with utmost sincerity and dedication. This I promise to the House."