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In 1947, India finally saw the light at the end of the tunnel, when it gained independence from British colonial rule. It stepped out of that tunnel as a nation, full of potential, enthusiasm, talent and a lot of financial problems. The aftereffects of the colonial abuse over the Indian resources and finances were more than severe. They were enough to push India into another tunnel, where the end was nowhere near in sight. But the solution to this problem came in the form of Draft article 92, which was adopted on 10th June 1949 by the Drafting Committee and later admitted as Article 112 in what would be known as the Constitution of India. This piece of writing governed the Annual Financial Statement, popularly known as the Budget, and established the extent of expenses allocated to the Consolidated Fund of India.


The 7 decade old lens of India’s annual budgets, tells us the story of this great nation’s struggles, successes and failures as an economy trying to thrive in a world full of dynamic problems. Independent India took the decision to advance its first annual budget in 1948, the financial difficulties and economic problems faced by the newly birthed nation were totally different from the problems the country is facing in the age of a covid-ridden world. This article aims to look at India through the perspective of its most important budgets, in order to assess how far we have progressed and changed as a nation. These budgets will include the ones which introduced significant measures which contributed to the shaping of our economy and the country alike.

The 1st Budget of India (From 1947 to 1948)

“Our economy is more balanced than that of most countries and, in spite of the setbacks resulting from partition, our large natural resources and sound financial position will enable us to launch a vigorous economic plan for substantially raising the living standard of our people,"

RK Shanmukham Chetty

(1st Finance Minister of Independent India)

India's first budget spanned only 7-½ months. The decision to pass the budget was the primary feature of the first budget. The main variables influencing the budget provisions were partition and the resulting destabilisation. The budget's three largest expenditures were on food grain production, defence services, and civil spending. Because food output was poor, self-sufficiency in food grains was given first emphasis. The budget income objective was Rs 171 crore (approx). The rise in spending was due to costs for stabilisation, refugee relief, and restoration.

The 1st Budget of the Republic of India (From 1950 to 1951)

This was India's first budget following the adoption of the Constitution, which declared the country a republic. The budget's principal objective was to create the groundwork for the Planning Commission, which would then develop effective plans for utilising the nation's resources. The early 1950s budget highlights in India centred around the public sector and finances, and hence focused heavily on taxation, inflation, and public savings. During this time, the agriculture sector was given priority. Defence and civil expenditures remained at all-time highs. Severe natural disasters, such as the earthquake in Assam, floods in Bihar and Uttar Pradesh, and droughts in Bihar and other regions of the nation, necessitated planning. The maximum rate of income tax was also decreased from 30% to 25% in the budget. Incomes in excess of Rs 121,000 were subject to a super-tax rate of 8.5 annas per rupee. The greatest rate of personal taxes was around 78%.

The Budgets which saw the economy move from an agricultural to an industrial nature (From 1955 to 1957)

The biggest aspect of these financial periods was industrial growth, which picked up steam with an annual growth rate of 8%. This was due to the expansion of chemical industries, the encouragement of small businesses, and advancements in the capital and consumer goods sectors. Allocations for the education sector were raised, including funds to states for basic, social, secondary, and university education, as well as scholarships for students from Scheduled Castes, Scheduled Tribes, and Other Backward Classes. Defence spending increased as a result of the navy and air force expansion programmes. Capital expenditure was boosted, while savings were encouraged. On a national basis, there was a concerted attempt to boost production and mobilise savings. Improvement was also made in increasing domestic savings and ensuring an appropriate inflow of external financing to fulfil foreign exchange requirements. Throughout 1953-54, the country's economic situation improved, and the economy gained strength in the course of 1955. The goal was also to raise the standard of life and alleviate poverty by lifting more households above the poverty line.

The Budgets which promoted Citizen Participation and Foreign Aid

(From 1965 to 1970)

During this time, the main concerns were rising food prices and shortages, as well as recovering industrial activity and enhancing exports. Industrial output increased at a pace of six to eight percent every year. The government supported the reinvestment of earnings and the lending of funds to private enterprises. The government encouraged citizens to become more involved in the expansion of industry. The major goal was to increase individual savings capacity and enhance industrial performance in order to get high returns on capital invested. For the first time, the budget included aid funds for foreign countries such as Nepal, Bhutan, and African countries. Despite efforts to limit its rising percentage, defence spending has steadily increased. Morarji Ranchhodji Desai's 1968 budget eliminated the necessity for excise authorities to inspect and assess each item leaving the plant. It established a self-assessment mechanism that any manufacturers, large and small, could use. Desai also removed the "spouse allowance" in this budget where both a husband and wife were income tax payers. For these reasons these budgets were also considered to be of a people centric or people sensitive nature.

The Budgets of coal, social welfare and employment opportunities (From 1970 to 1975)

The main goals for this period were to provide enough job opportunities. Dry farming regions were given more attention, and small businesses and entrepreneurs were promoted. The 1970-71 budget provided provisions primarily through social assistance systems with future development potential. Institutional financing was also mobilised to aid industry and agriculture in the long run, in order to provide job prospects. Other areas of emphasis were rural and urban development, drinking water facilities, and pension plans. The budget also included Rs 56 crore for the nationalisation of general insurance firms, the Indian Copper Corporation, and coal mines. This was done to provide an uninterrupted supply of coal in the face of rising demand for coal in sectors such as electricity, cement, and steel at the time.

The MODVAT and MAT Budgets (From 1985 to 1990)

MODVAT credit was implemented. This permitted for the credit set-off of duty paid on raw materials against duty paid on finished items, reducing the impact of tariffs on the ultimate price of commodities. In this period, budget provisions also recommended the establishment of a small industries development bank, an accident insurance policy for municipal sweepers and railway porters, and bank loans with a subsidy for rickshaw pullers, cobblers, and other self-employed persons. The state also recommended the establishment of a mutual fund managed by Unit Trust of India and the Mahanagar Telephone Nigam Limited. The administration has stated its goal to abolish the licence raj. The finance ministry's enforcement directorate was founded with the mission of sniffing out tax evaders. Provisions with respect to the minimum corporate tax, often known as the MAT or Minimum Alternative Tax, were also enacted in order to draw into the tax net extremely profitable corporations that were lawfully avoiding paying tax.

The Liberalisation Budgets (From 1991 to 2000)

The year 1991-92 saw the start of economic deregulation. Import-export policy was altered, and import levies were reduced to expose Indian industry to outside competition. The government began the process of rationalising tariff structures by lowering the maximum customs charge from 220 percent to 150 percent. Because the balance of payments was in jeopardy, this was done. In the 1994 budget, the government imposed a service tax. Individual and corporate tax rates were reduced in the 1997 budget. It permitted businesses to deduct MAT paid in previous years from their tax burden in succeeding years. In order to bring out black money, the government also developed the Voluntary Disclosure of Income Scheme (VDIS). It phased away ad hoc treasury notes that were used to finance the budget deficit. The goal of Budget 1997 was to broaden the tax base. In the late 1960s and early 1970s, India had a maximum income tax rate of 97.5 percent. Rates were moderated, which increased general compliance since people who previously found rates exorbitant began to pay up instead of concealing their revenues. Personal income tax receipts surged from 1997-98 to April 2010-January 2011—from Rs 18,700 crore to Rs 100,100 crore. VDIS made almost Rs 10,000 crore. Increased discretionary money in the hands of taxpayers aided in the generation of demand. The additional tax revenues were used to bolster government spending on social welfare and infrastructure.

The Budgets which promoted India as a Major Software Hub (From 2001 to 2011)

During this time, incentives for software exporters were gradually down. In Budget 1991, revenue from software exports was tax-free for three years, and the tax vacation was extended in Budget 1995 to indefinitely. This was done to increase the tax-to-GDP ratio and to promote India as a significant software development centre in the globe. The implementation of this tax break for the software export sector was met with unprecedented development in the Indian IT industry. In 2001-02, transfer pricing restrictions were also implemented, requiring transactions between connected firms to be transparent and complete. The rule had a significant influence in preventing the loss of India's revenue base. In real terms, GDP was predicted to have increased at a rate of 8.6 percent in 2010-11. The economy has shown extraordinary resiliency. The continuation of rising food costs was a major source of anxiety. Despite greater availability of food goods, consumers were denied the advantage of seasonal price drops, showing flaws in distribution and marketing systems. Inflation was predicted to be moderated further in the following months as a result of monetary policy actions. Exports increased by 29.4%, while imports increased by 17.6% during April to January 2010-11 compared to the same period the previous year.

The Covid Budgets (From 2019 to 2022)

An annual rise of 14 percent was seen between the budgets of 2019-20 and 2021-22. The revenue expenditure was expected to be about Rs. 29,29,000 crore, a 12% increase over 2019-20, while the capital expenditure was aimed at Rs. 5,54,236 crore, a 29% increase over 2019-20. Capital expenditures accounted for 12% of total central government spending in 2019-20. This is predicted to climb to 15% of total spending in 2021-22. The government receipts increased by 6% year on year in 2019-20, with the total anticipated at Rs. 19,76,424 crore. Borrowings are expected to rise by 27% year on year to Rs. 15,06,812 crore in 2019-20. The federal government has planned to send Rs. 13,88,502 to states and union territories in the budget of 2021-22, representing a 10% yearly increase over the budget of 2019-20. The revenue deficit is projected to be 5.1 percent of GDP in 2021-22, while the fiscal deficit is projected to be 6.8 percent of GDP. The primary deficit is fixed at 3.1 percent of GDP (i.e., the fiscal deficit less interest payments). The revenue shortfall will be 7.5 percent of GDP in 2020-21, while the fiscal deficit will be 9.5 percent of GDP, according to the latest estimate. The nominal GDP is predicted to grow at a 14.4 percent annual pace in 2021-22. GDP growth was anticipated to be 10% in Budget 2020-21, however it has now been lowered to -13%. In 2021-22, overall indirect tax receipts are expected to reach Rs 11,02,000 crore. The government estimates that GST would generate Rs 6,30,000 crore. The central GST is estimated to account for 84% of overall GST tax revenues, with the GST compensation accounting for the remaining 16%. Income tax receipts are expected to rise by 7% per year to Rs 5,61,000 crore in 2021-22. The revised income tax revenue prediction for 2020-21 was 28% lower than the budget estimate. The budgets for 2019-20 and 2021-22 are distinct in their own right. The budget for 2019-20 was intended to pave the road for India to have a $5 trillion economy, while the budget for 2021-22 was the first-ever digital budget.


Considering that we started out with our pockets nearly empty, it will not be untrue to say that as a nation we have made more than just progress. Over the years, India has seen the wisdom of many financially intelligent minds. Their policies and schemes have in one way or the other benefitted the general public and continue to do so. While the nature of our budgetary policies has been very dynamic in nature, one thing that has always remained constant since the inception of the practice of having a budget is the policies’ major focus on the long term goals and macro growth. It is very apparent that India has the potential to become an economic superpower and that can be achieved even in a covid ridden world - all one needs is a good plan. Because, you see, for a state to expand and thrive, it is essential for leaders to allocate finances in such a way that every developing component of the country is pleased. To gain milestones and make its way into the top countries of the globe, India must make improved improvements in its union budget each year, ensuring that the budget ticks all the boxes essential for the nation's progress.

So can we expect a good plan from the budget of 2022-23. As per predictions and the media the answer is yes - but the answer is yes only if you are not a part of the general working and tax paying population. Unfortunately, the budget hasn’t provided any concrete easement over tax slabs, which means that there is no relief for the taxpayers of the country.

However, if you are into real estate, you must know that, in addition to an emphasis on urban growth, data centres will be designated as infrastructure, as will housing, which has been allocated INR 48,000 crores for 80 lakh additional houses. The states will now be able to participate in the SEZ law. Land record digitization and the development of expert groups for urban capacity building are also being implemented. The latter is a crucial stage because the emphasis has been declared to be on tier 2 and 3 towns as well as the larger cities. With the ongoing revolution in digital consumption and an emphasis on data localisation regulations, the grant of 'infrastructure status' to data centres is projected to attract substantial investment interest and expanded access to financing. This is likely to attract a big number of global IT corporations that have been considering India as a feasible location for data centres. A specific task force on the AVGC industry will strengthen India's ability to perform on a global scale.

IT firms will be closely monitoring the new law that will replace the Special Economic Zones Act. The new legislation will be implemented in collaboration with other states, with the goal of increasing export competitiveness. The high-level committee for urban planners and economists to make recommendations on urban capacity building, planning implementation, and governance will open up new avenues for development and investment, as working-from-home during the pandemic has forced a large portion of the workforce to relocate to tier 2 and 3 cities. States are being incentivized to implement such policies by receiving interest-free loans from the central government. Among other budgeted developments, the expansion of the Emergency Credit Linked Guarantee Schemethrough March 2023, as well as an extra grant of INR 50,000 Cr, is a good measure that is likely to support the MSME sector, particularly the troubled hotel subsegment.

Is this a good plan, that only time will tell, until then, the general tax paying public, with no easement on their slab under their bag can just wait and watch.



Written by Shubhi Pandey (

Edited by Mehak Vohra


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