Finance Minister Nirmala Sitharaman yesterday presented Union Budget 2021 and announced several reforms and fund allocation to take the country’s economy out of slump, which is slowly but steadily moving upwards. From healthcare to infrastructure, education, startups, MSMEs, senior citizens and more, the government had something for everyone.
Through the last one year, we have witnessed many changes and have even adapted to them. Digital is one of them. Even Union Budget could not ignore going digital with our FM replacing the red bahi khata with Made in India tablet. Though this is an interesting move, there are some interesting facts about the Union Budget of India. Let’s take a look at some of them, starting with the basics:
- As of September 2017, the record says that Morarji Desai presented the highest number of Union budgets (10), P Chidrambaram (9), Pranab Mukherjee (8), Yashwant Sinha, Yashwantrao Chavan and C D Deshmukh presented seven budgets each, while Manmohan Singh and T T Krishnamachari presented six budgets.
- The first Union Budget of Independent India was presented on 26th November, 1947 by R K Shanmukham Chetty. The total revenue of the budget that year stood at Rs.171.15 crore, while the fiscal deficit stood at Rs.24.59 crore. The interesting fact is that nearly half (46 percent) of the budget was allocated alone to Defence services.
- It was in the Union Budget 1948-49 that the then finance minister R K Shanmukham Chetty used the term interim budget for the first time. The term later became an institutional process for each year the general elections are held.
- Under the Union Budget 1949-50, the government decided to abolish the Capital Gains Tax, which was later reinstated under the budget 1956-57. The tax still continues to serve as an entity closely monitored by the IT authorities to prevent tax evasion.
- Planning commission was formally announced in the budget of 1950-51. This is the primary body headed by the Prime Minister of the country.
- Interesting to note that in the budget 1953-54, the government raised the minimum income tax exemption limit from Rs.3,600 to Rs.3,200, a 17 percent up.
- Another one in the lines of IT exemption, in the budget 19555-56, the government proposed the idea of having different tax-exemption limits for married and unmarried individuals – a move to create a suitable scheme of family allowances.
- Wealth tax was first ever introduced in the budget of 1957-58. The tax existed for the next six decades.
- However, breaking the tradition, the then Prime Minister Jawaharlal Nehru decided to present the Union Budget of 1958-59. It was this year that he introduced a new taxation instrument called the Gift Tax.
- Another interesting turn of event was when the government gave out estimates of the PL480. It was an import agreement signed between India and the US administration in 1959 to import food grains and other agriculture commodities. However, the decision later snowballed due to consistent backlash from the people.
- Union Budget 1962-63 saw the government increase the income tax rates to 72.5 percent, excluding surcharge. Surprised! No points in guessing that this was the highest tax surcharge ever.
- Most of us mustn’t be aware of the super-profits tax levied by the government in Union Budg 1963-64. It was an additional tax levied on the corporates and wealthier individuals in India. The tax was above the normal income tax.
- Another tax – Expenditure Tax – was introduced in the budget 1964-65. It came hitting right at the wrong places and hence the government had to later abolish the tax under the budget of 1966-67 when it faced tremendous criticism from the corporates. The tax was a direct taxation tool levied on all expenditure above Rs.36,000 per annum.
- Spouse Allowance was abolished in the union budget 1968-69.
- Union budget 1970-71 scripted another history in the books of India’s Union Budget. It was the first time ever that a woman presented the budget. The then Prime Minister Indira Gandhi took the additional charge of Finance Minister to present the historic budget.
- Have you ever heard of being taxed heavily when buying flight tickets in rupees? Yes you heard it right. The union budget 1971-72 introduced a new tax regime, which levied an additional tax rate of 20 percent on all flights tickets p0urchased in rupees, while tickets paid for in foreign exchange were exempted from this tax. However, the instrument was introduced to put a clamp on cash deals that had a bearing on travelers.
- In the budget 1974-75, the government decided to slash the maximum marginal rate of IT including surcharge to 75 percent.
- An additional tax of 15 percent over and above the existing taxes on food and drinks was imposed on the gross receipts of luxury hotels in the union budget of 1980-81. This was done to curb spending on nonessentials and aspirational lifestyle.
- The first import tax of 15 percent on the previously custom duty-exempt was introduced on imported newsprint.
- Union budget 1982-83 provided relief to working class taxpayers who were nearing retirement. The government proposed to exempt the unused earned leaves that salaried employees encashed on retirement.
- In the Union Budget 1985-86, the then FM VP Singh proposed to set up the Board for Financial and Industrial Reconstruction, which laid the foundation of modern day insolvency code.
- I think it was in the union budget 1986-87 that the first VAT was introduced in the form of MODVAT – Modified Valued Added Tax. We can all it the big brother or the first version of the present day GST.
- The union budget 1987-88 was the second budget in the history of India’s union budget that a Prime Minister presented the budget. He introduced AMT – Maximum Alternative Tax.
- Kisan Vikas Patra was introduced in the budget of 1988-89 to mobilize untapped rural savings – a scheme that doubled the deposit in just five and a half years.
- Union budget 1989-90 saw the introduction of a new instrument –Equity Linked Savings Scheme or ELSS to encourage people to invest their savings into the stock markets.
- NSE’s establishment was announced in the union budget of 1993-94.
- Significant reforms in the indirect tax structure was introduced by the then FM Manmohan Singh in the form of Service Tax in the union budget of 1994-95. Hence the government levied a five percent tax on the telephone, non-life insurance and stock broking services.
- 1995-96 union budget saw the establishment of an independent regulatory authority to oversee the working of insurance sector.
- The Dream Budget was presented by P Chidambaram in 1997-98. The budget saw several economic reforms introduced in India including lowering IT rates, removal of corporate tax surcharge and reduction of corporate tax rates. Voluntary Disclosure of Income Scheme (VDIS) was also first introduced this year.
- The Union Budget of 1998-99 brought two specific schemes to attract NRI investments in India = UTI India Millennium Scheme and SBI’s Resurgent India Bonds.
- Kargil Tax in 2000-2001 union budget, Transfer Pricing Regulations in 2001-2002, and GST in 2006-07 were introduced.
- Second UPA government announced the setting up of the Unique Identification Authority of India, which subsequently launched the Aadhar project in 2009-2010 budget.
- The super-rich had to pay an additional 10 percent of surcharge for being rich under the Super-rich tax introduced by P Chidambaram in the union budget of 2013-14.
- Nirmala Sitharaman’s Budget speech of 2020 was the longest ever in the history of India’s Union Budget. It continued for nearly three hours.
- The Union Budget was earlier presented on the last working day of February at 5 PM. However, in 2000, the then FM Yashwant Sinha changed the timing to 11 AM and it continues to remain so. And in 2016, the then FM Arun Jaitley changed the tradition to February 1, which is being followed since then.
- Railway budget was earlier presented few days before the union budget till 2016. However, the Modi government approved the merger of Rail and General Budgets on 21st September 2016. This ended a 92-year old practice of a separate budget.
- This year saw an additional cess of five percent levied in the name of Farmers cess,
These were some important amendments and/or policies and moves that were announced or implemented in the Union Budget of India. However, did you know that the first ever union budget of India was not presented in 1947, but on February 18, 1860 by Finance Member of the Viceroy’s Executive Council of India, Scotsman James Wilson. You may not know that Wilson is the founder of The Economist and Chartered Bank, which later was merged with the Standard Bank in 1969.
However, the Union Budget of 2019 was yet another history budget. We saw finance minister Nirmala Sitharaman shed the age-old tradition of the budget briefcase and switched to the traditional ‘bahi khata’ wrapped in red cloth. A tradition inherited from the UK, the Budget Briefcase tradition was started by budget chief Willian Gladstone. But why a briefcase? Because his budget speeches used to be so long that to accommodate all his papers, he needed a briefcase.
Have you ever heard about Black Budget? The Union Budget of 1973-74 was termed as Black Budget as it was presented during severe economic crisis led by failed monsoon and Bangladesh war. There was a deficit of Rs.550 crore. The budget also had plans to nationalize general insurance companies and coal mines.
Earlier the budget documents were printed at Rashtrapati Bhavan, but later the printing address shifted to a press in Minto Road and then to the basement of North Block. Why? Because there was a leak in 1950 and hence the government had to decide to change the printing address.
There are many more interesting facts about India’s Union Budget. It is better the stories continue and we get to see our budget strengthening our economy and people further.