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Independent India’s first ever Budget was presented by RK Shanmukham Chetty, the finance minister of the free country, on November 26, 1947. A poverty-stricken country that India was at that time, the Budget as expected focused on food grain production, civil expenditure and defence.
Wearing a dark, pin-striped, three-piece suit, and carrying a leather bag, Chetty’s first words were thus, “I rise to present the first Budget of a free and independent India. This occasion may well be considered an historic one and I count it a rare privilege that it has fallen to me to be the Finance Minister to present this Budget.”
Partition, a destabilised economy and political upheavals formed the core factors that determined the budgetary provisions.
The Budget, which was for a period of just seven-and-half months, had a targeted budget revenue of Rs 171.15 crore. India’s fiscal deficit was estimated at Rs 26 crore at that time with the revenue expenditure at about Rs 197 crore.
The increase in expenditure was on account of expenses allocated for stabilisation, refugee relief and rehabilitation. As independent India fought its first war with Pakistan that started in October that year, allocation for defence stood at Rs 92.74 crore, a staggering 47 percent of the total chunk.
The strength of the army of undivided India at that time stood roughly at 410,000 troops. After the completion of the reconstitution of the Army, India had roughly 260,000 troops and a civilian population of 300 million, the second largest in the world.
Food production was low and, therefore, self sufficiency in food grain production was accorded the second highest priority. Since independence, India has had 25 finance ministers who have presented and passed 87 budgets so far.
“The partition of the country has cut across its economic and cultural unity and the growth of centuries of common life to which all the communities have contributed. The long-term effects of the division of the country still remain to be assessed and we are too near the events to take a dispassionate view. When the ashes of controversy have died down, it will be for the future historian to judge the wisdom of the step and its consequences on the destiny of one fifth of the human race,” had said Chetty.
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