New Delhi: The Union Budget is one of the most important policy documents shaping India’s economic direction. The budget lays out the government’s plans for revenue, spending and fiscal priorities with its origins dating back to the colonial period. Over time, it has evolved to reflect the country’s changing economic needs. The upcoming Union Budget for 2025–26 will be presented by Finance Minister Nirmala Sitharaman in Parliament on February 1.
India’s first Union Budget was presented on April 7, 1860, by James Wilson, the finance member of the Indian Council and the founder of The Economist. At that time, the country was under British rule, and the Budget was introduced to address the financial strain faced by the colonial administration after the First War of Indian Independence in 1857, also known as the Sepoy Mutiny.
After the failed rebellion, Queen Victoria appointed James Wilson to overhaul India’s financial system. His task was to introduce a structured tax framework and implement a new paper currency. One of his most important contributions was the introduction of income tax, which remains a major source of government revenue even today.
The British government had earlier considered introducing direct taxes but struggled with how to implement them, even proposing a poorly structured licence tax. After arriving in India, James Wilson scrapped that plan and introduced two well-defined bills, one on income tax and another on a revised licence tax.
In his financial statement, he clarified that individuals earning less than Rs 200 a year would be exempt from paying taxes. Wilson also introduced an appropriation audit, based on the English system, to monitor monthly government spending. Despite his short tenure, he played a key role in tackling India’s post-revolt financial challenges.
Following Independence, India’s first Union Budget was presented on November 26, 1947, by R K Shanmukham Chetty, the country’s first Finance Minister. Since 2019, the responsibility of presenting the Union Budget has rested with Nirmala Sitharaman, and the upcoming one will be her eighth consecutive Budget. In 1947, the total estimated expenditure stood at Rs 197.29 crore, while revenues were projected at Rs 171.15 crore. Nearly 46 per cent of the spending about Rs 92.74 crore was allocated to defence, highlighting the young nation’s immediate post-Independence priorities.
R. K. Shanmukham Chetty was born on October 17, 1892, in Coimbatore, Tamil Nadu, into a prosperous family of mill owners. He studied economics at Madras Christian College and later pursued law at Madras Law College. During his early years, interactions with nationalist leaders played an important role in shaping his political outlook and ambitions.
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