This Insight19 podcast gives a brief recap of the history of the Union Budget from the 50's
(Note: This podcast was first published in January 2018 and has been repurposed for Moneycontrol listeners.)
India's first Finance Minister, Sir R.K. Shanmugham Chetty, presented the first Finance Budget of independent India on November 26, 1947. His choice for finance minister was, at the time, a controversial one due to his pro-British leanings.
In the 1949-50 budget, the government abolished the much abused tax evasion instrument, the Capital Gains Tax. This is the tax that must be paid when one sells real estate for a profit, for instance. The concept of Capital Gains Tax, which was abolished a few years earlier, was brought back in the budget of 1956-57. This move was carried out by C.D. Deshmukh.
The 1950-51 budget announced a cut in the super-rich tax rate, so as to push savings. In the words of John Mathai, it was proposed to abolish the distinction between earned and unearned income and to levy a uniform rate on both.
The 1951 Budget by John Mathai laid down the road map to the creation of the Planning Commission. After independence, it was hoped that the five year plans would steer the Indian Economy towards balanced growth.
The 1954-55 budget announced plans to set up a specialized financial institution to offer loans to industry. This institution would one day become ICICI.
The 1957-58 budget proposed a new direct taxation instrument called the Wealth Tax. This would remain in use for the next six decades. Also called a capital tax and equity tax, it is a levy on the total value of personal assets.Gift Tax was a then new tool that was used with some success in the West. This was introduced to India in 1958-59 by a one time Budget Presenter: Jawaharlal Nehru.