Budget 2024 Primer – Understanding the many Firsts about the budget

8 Jan 2024 , 09:22 AM

Look at some budget firsts

Budget is normally a serious subject as you need to navigate through a maze of numbers and percentage comparisons. In addition, there are the complex rules and modifications in the tax rules that are announced, as part of the Finance Bill. Here, in this Budget Primer, we look at some of the things that happened for the first time in any budget. We span across all the Union Budgets presented since the first budget presented way back in 1947, just after India became independent. Here is a list of some of the first that happened in a budget.

Maiden budgets presented

If you though that budgets presentation started only after independence, then think again. The first ever Union Budget for India was presented way back in 1860. It may be recollected that it was in 1858 that Queen Victoria proclaimed the shifting of the Indian administration from the East India Company to the British Crown. This was an immediate reaction to the Sepoy Mutiny of 1857. With the Indian administration coming directly under the British Crown, the first ever Colonial Budget for India was presented by economist James Wilson in the year 1860. This practice of Colonial Budgets continued well into the twentieth century and the first budget of independent India was presented by India’s first finance minister, RK Shanmukham Chetty. The total revenues in that year were Rs171 crore, a far cry from the Rs28 trillion today.

Prime ministers and budgets

Post 1991, the union budget was serious business and there was always a finance minister, separate from the prime minister. However, prior to 1991, it was common for prime minister to also double up as finance minister. Jawaharlal Nehru was the first prime minister to present the budget in parliament in 1958-59, while Indira Gandhi was the first woman prime minister to present the budget on the floor of the house. Rajiv Gandhi has also presented the budget as finance minister, when he was already the prime minister. Charan Singh was the prime minister of India for less than 6 months between January 1979 and July 1979; but during this period, he also managed to present one full budget.

Nirmala Sitharaman not the first lady to present the budget

It is often believed that Nirmala Sitharaman was the first lady finance minister to present the Union Budget. Actually, Indira Gandhi was the first lady to present the budget in parliament as finance minister, when she was also holding the post of prime minister. Nirmala Sitharaman is the second lady finance minister to present the Union Budget. However, she has the distinction of being the only lady finance minister of India (not being prime minister) to present a budget and for presenting 5 consecutive budgets on the floor of the house.

Maximum changes in finance ministers in a year

You can call this a dubious distinction, and it had to do with the inherent volatility of coalition minority governments. Between January 1979 and January 1980, India saw 6 finance ministers occupying the office of the finance minister. Never before and never after, have so many finance ministers changed in such a short span of time. HM Patel moved out in mid-January 1979, then Charan Singh was the Finance Minister till July 1979. In July, Morarji Deasi became finance minister for just 12 days. Later HN Bahuguna held the post for 83 days and again Charan Singh held the post for 87 days. In January 1980, the Congress came back to power and R Venkataraman became the finance ministers; making it 6 finance ministers in just 12 months.

When was the first big fiscal deficit presented in a budget 

OK, fiscal deficit in India is as old as the presentation of budgets. Even in the first Union Budget of independent India in 1947, India had budgeted revenues of Rs171 crore and a fiscal deficit of Rs24.6 crore. The fiscal deficit stayed in check for a long time till the year 1973, when the Black Budget was first introduced by the then Finance Minister, Yashwantrao Chavan. The fiscal deficit had spiked to Rs550 crore, much higher than expected, earning it the tag of Black Budget. The spike in the fiscal deficit was caused by the aftermath of the Bangladesh war, the food crisis following a weak monsoon and the oil crisis globally. It had then created a major furore in Parliament. Today the fiscal deficit is more than Rs8.1 trillion and nobody really bats an eyelid.

First reformist budget of independent India

There are disputes over whether the 1986 budget should be called the first reformist budget or the 1991 budget. For sheer scale of change and the way it restructured the Indian economy, the 1991 budget takes the cake. Dr Manmohan Singh as the finance minister, and with the able support of prime minister Rao, went on to change the rules of the Indian economy. The license raj was dismantled, duties were cut drastically, foreign investors were allowed to India, quotas were done away and companies were allowed to expand. In short, the animal spirits of capitalism were unleashed for the first time in the year 1991. It put the Indian economy on the path of high growth and the economy has not really looked back since. Subsequently, there were big bang budgets like the 1997 budget by Chidambaram and the 2000 millennial budget by Yashwant Sinha. However, for sheer impact and audacity, few budgets ever came close to the 1991 landmark budget of Dr Manmohan Singh.

Changes in the form and structure of the Union Budgets

Back in the 1990s, the post budget analysis by Nani Palkhivala was one of the most sought after events in most of the metros. Palkhivala used to remark that India was the only country where the budget was an event. He also used to say that the practice of presenting the Union Budgets in the evening was a colonial hangover and had little relevance to independent India. Over the years, India did change a lot of things about the form and structure of the Union Budget. Until the year 2000, the Union Budget continued to be presented in the evening. 

However, since 2001, the Union Budget has been presented at 11.00 am instead of the 5.00 pm in the past. There were two more big changes that happened in the year 2017. That year, the government shifted the budget from the last day of February to the first day of February. That gave the government 2 months to get the approval for the budget provisions in the same fiscal, so vote on account was not needed for routine expenses. The second change since 2017 has been that the railway budget was merged and made part of the Union Budget. Till 2016, the railway budget was presented by the railway minister on the floor of the house a day ahead of the Union Budget.

From printing the Union Budget to paperless budget

It is  only logical that a government that prides itself on being tech savvy also walks the talk. We come back to that later. In the year 1950, the budget got leaked for the first time. After that, the budget printing was moved from Rashtrapati Bhavan to Minto Road in New Delhi. Since 1980, the budget is printed in a dedicated press set up at North Block. The last Union Budget presented on February 2023 was the first time the budget was entirely digital. No copes of the Budget were presented and Nirmala Sitharaman also presented the budget directly from her tab. So, the government is surely walking its talk on going paperless.

Shifting from briefcase to Bahi Khata

Did you know the origin of the word Budget? It is actually derived from a French word “Bougette” which translates into a small bag or a brief case. That was the colonial hangover of the Union Budget. However, in the year 2019, Nirmala Sitharaman made the shift to Bahi Khata instead of carrying the budget documents in a brief case. Now, Bahi Khata is a traditional red cloth in which the document is wrapped and brought to the parliament. More than anything, it was to make a statement that India had finally gotten over its colonial hangover. However, with the advent of digital budgets, neither the briefcase nor the Bahi Khata may have too much of relevance. 

Budget is not just about serious numbers, but there are also some very interesting stories about budgets. They just add to the aura of what union budgets are all about.