India readies for 92nd Budget: What the first Budget looked like in 1947

For the sixth time, Finance Minister Nirmala Sitharaman will stand up in Parliament and present the Union Budget on 1 February. This year’s annual financial statement is slightly different, as it is an interim budget. As of date, India has witnessed 77 regular Budgets and 14 interim Budgets . In total, 91 Union Budgets were placed in Parliament to date. This year will be the 92nd Union Budget. As we prepare for this year’s big moment, Budget day, let’s go down memory lane and look at who and how the first every Budget of India was presented. The man behind India’s first Budget India’s budget history is rich and deep. In fact, the first Budget was presented in 1860 by Scottish economist James Wilson. And it was Wilson who introduced income tax collection. Years later, Independent India’s first Budget was presented by first Finance Minister RK Shanmukham Chetty on 26 November 1947 — just three months after India attained freedom from the British — for the seven-and-a half month-period from 15 August 1947 to 31 March 1948. Interestingly, India’s first Budget too was an interim Budget as it is this year. For the unknown, Chetty, born into a business family of Coimbatore in 1892, was a well-educated man who studied economics at Madras Christian College and graduated in law from Madras Law College. He made an entry into politics after completing his education and served in both the nationalist Swaraj Party and the Justice Party. He was also the Diwan of the Cochin kingdom from 1935 to 1941. [caption id=“attachment_13670092” align=“alignnone” width=“640”] RK Shanmukham Chetty, born in Coimbatore in 1892, was appointed as the country’s first finance minister by Jawaharlal Nehru. Three months after India attained independence, he presented the country’s first Budget. Image Courtesy: @prasarbharati/X[/caption] Chetty was well-known for his economic and legal acumen. He represented India at several international platforms that included the 1928, 1929 and 1930 International Labour Organisation conferences in Geneva, the 1944 World Monetary Conference at Bretton Woods and the Assembly of League of Nations in 1938. It is also reported that Chetty significantly contributed to the development of important trade and commerce bodies. He also holds the honour of being only one of three non-Congress individuals to be inducted into the Cabinet. Jawaharlal Nehru, India’s first prime minister, chose Chetty as his finance minister.

The ‘B’ moment is here On 26 November 1947, when the big moment arrived, Chetty wearing a dark, pin-striped, three-piece suit, and carrying a leather bag , delivered the first Budget of free India. The leather case was a nod to the meaning of the word budget, which comes from the French word ‘Bougette’ that means leather briefcase. And unlike today when the Budget is presented in the mornings, Chetty presented India’s first Budget at 5 pm. This was because politicians and officials wanted their counterparts in Britain to follow the details comfortably. According to historians, as he rose up to present the Budget speech, Chetty said: “I rise to present the first budget of a free and independent India. This occasion may well be considered as a historical one, and I count it as a rare privilege that it has fallen to me to be the finance minister to present this Budget.” In his speech, he underlined his concern over rising prices, due mainly to “accumulation of surplus purchasing power in the hands of the community” as well as “all round fall in production, both industrial and agricultural”. And what did India’s financials look like in the first Budget? It had a targeted budget revenue of Rs 171.15 crore. Moreover, the total expenditure for that year was estimated at Rs 197.29 crore. Compare this to last Budget — the government had estimated an expenditure of Rs 45,03,097 crore. Notably, of the total expenditure, a sum of Rs 92.74 crore was estimated on account of the defence services in the first budget. India’s first Budget also estimated the country’s fiscal deficit at Rs 26.24 crore.

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The evolution of budgets In 1948, Chetty resigned as finance minister and the next Budget was presented by John Mathai from Kerala. And following that we have had several ministers deliver the Budget. While the Budget itself has become more sophisticated, the process of drafting one remains pretty much the same and it is still shrouded in secrecy until its presentation. In fact, the secrecy surrounding the Budget comes after UK Chancellor of the Exchequer Hugh Dalton had inadvertently disclosed some tax adjustments to a journalist. Before Chetty delivered his Budget speech to the Indian Parliament, the journalist publicised the information.

Other aspects of the Budget have also changed over the years. Initially, the Budget announcement was made on the last working day of February. This was changed to 1 February in 2017. Not only the budget date, then Finance Minister Arun Jaitley also ended the 92-year-old British tradition to present a separate budget for Railways; he merged the Railways Budget with the Union Budget in 2017. Until 2019, all finance ministers carried the Budget in a briefcase. It was then that Finance Minister Nirmala Sitharaman introduced the bahi khata – a traditional ledger of accounts. And in 2021, she also introduced the country’s first paperless budget — she took a digital tablet wrapped in a tradition ‘bahi-khata’ style pouch. With inputs from agencies