Notes on Lecture: The Evolution of Budgeting

British Rule in India and Budget Introduction

• Year: 1959, post-first war of independence.
• Context: British rule over India was unstable; Q. Victoria sent James Wilson to manage finances.
• Wilson's Task: Create a new tax regime & introduce paper currency.
• First Budget Presented: 1860, introducing income tax for earners above 200 rupees.

Historical Context of Budgeting

• Origin of Budgeting: The term is relatively new; budgeting practices date back to ancient times (Egyptians & Romans).
  • Egypt: Command economy; Pharaoh controlled everything.
  • Rome: Faced budget issues in 60 BC, leading to fiscal reforms by Julius Caesar.

Indian Empires and Their Budgets

• Maurya Dynasty: Revenue system involved common taxes and currency introduced by Chandra Gupta Maurya.
• Mughal Empire: Akbar had a progressive tax policy—taxes varied based on land productivity.

Evolution of Budgets

• 1689 Glorious Revolution: Parliament gained control over budget in Britain.
  • Budget Origin: Term "budget" comes from the Latin "bulga" (meaning bag).
  • Robert Walpole's Role: Initiated budget discussions in Parliament in 1733.
  • By 1800, budget discussions became standard practice, although not day-long events yet.

Developments in France and the U.S.

• French Adoption: In 1803, France adopted the English term "budget".
• U.S. Budgeting: Alexander Hamilton submitted the first informal U.S. budget in 1790.
• Formal U.S. Budget: Established in 1921; presidents took charge of budget preparations since then.

Modern Budgeting Practices

• Great Depression: Shift towards more structured budget policies; recognized need for government intervention.
• India: Post-independence, budgets have evolved significantly.
  • First Budget after independence: November 1947 by RK Shanmugam Chetty.
  • Notable Budgets: 1991 reform budget, 1997 dream budget, 2000 millennium budget.
  • Recent Changes: Merging of railway union budgets (2017) and shift to digital budget documentation (2021).

Current Budget Address (2024-25)

• Vision: Build a prosperous country focusing on inclusive development.
• Focus on: Jobs, empowerment of youth, women, farmers, and marginalized communities.
• Strategies Highlighted:
  • Skilling: 20 lakh youth will be skilled over 5 years; initiatives to enhance women's workforce participation.
  • Agriculture: Allocation of funds for enhancing agricultural practices and technology adoption.
  • Rural Housing: Commitment to provide housing for marginalized groups.
  • Financial Measures: Increasing money flow to small and medium enterprises (SMEs) through credit guarantees.

Tax Reforms and Budget Allocation

• Taxation Policies: Introduced various reforms aimed at reducing tax burdens on the common man.
• Increased Funding for Various Sectors: Health care, education, infrastructure, and social welfare programs.
• Overall Economic Goals: Target of fiscal deficit reduction, job creation, market competitiveness.

Global Context Overview

• International Trade and Cooperation: India's reforms and investments aimed to position itself as a leader in global markets.
• Geopolitical Landscape: India assumes a significant role in modern global supply chains and strategic partnerships.

Key Goals by 2047

• Vision for Bharat: Modern infrastructure, empowered citizens, and achieving high economic growth through collaborative efforts.
• Inclusivity as the Core Principle: All programs focused on reducing inequality and enhancing social mobility.