Who Introduced the First Budget in India After Independence?

First budget in India after Independence: India attained independence on 15 August 1947, and the first budget of independent India was presented by then Finance Minister R. K. Shanmukham Chetty on 26 November 1947.

This budget came just three months after India gained independence from British rule. It was an interim budget, covering a period of seven and a half months until March 31, 1948.

The total estimated expenditure was ₹197.29 crore, with revenues targeted at ₹171.15 crore. Notably, about ₹92.74 crore, or nearly 46%, was allocated for defence services, reflecting the nation's immediate priorities post-independence.

In 2025, Finance Minister Nirmala Sitharaman is set to present the Union Budget for the fiscal year 2025-26. This will mark her eighth consecutive budget presentation, continuing her role in shaping India's economic landscape during a crucial election year.

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Who was R. K. Shanmukham Chetty?

R. K. Shanmukham Chetty was born on October 17, 1892, in Coimbatore, Tamil Nadu, into a wealthy family of mill owners. He completed his education at Madras Christian College, where he studied economics, and later attended Madras Law College to earn his law degree. His early exposure to nationalist leaders influenced his political views and aspirations.

Political Career

Chetty began his political journey as a councillor in the Coimbatore Municipality in 1917. Initially associated with the Indian National Congress, he later joined the Justice Party and was elected to the Madras Legislative Assembly in 1920.

His notable contributions include introducing a bill to eliminate discrimination against the untouchable community in 1931. He served as the Diwan of the Cochin Princely State from 1935 to 1941, implementing significant administrative reforms.

Contribution as Finance Minister

In independent India, Chetty became the first Finance Minister and presented the inaugural budget on November 26, 1947. This budget aimed to address the pressing economic needs of a newly independent nation. 

Later Life and Legacy

Beyond politics, Chetty contributed to various trade organisations and supported Tamil language initiatives. He founded institutions like the Tamil College in Perur and served as Vice-Chancellor of Annamalai University for a year.

R.K. Shanmukham Chetty passed away on May 5, 1953, leaving behind a legacy as a significant figure in India's early political landscape.

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What Were the Significant Economic Policies Introduced by Chetty During His Tenure as Finance Minister?

R.K. Shanmukham Chetty, as the first Finance Minister of independent India, introduced several significant economic policies during his tenure:

1. First Budget: He presented the inaugural budget on November 26, 1947, which aimed to stabilise the economy post-independence. The total expenditure was estimated at ₹197.29 crore, with a focus on defence and essential services.
2. Inflation Control Measures: Chetty emphasised the need for balancing the budget to manage inflation. He advocated for a surplus budget to mop up excess purchasing power in the economy, which was crucial in a time of rising prices.
3. Decontrol of Food Prices: He initiated a gradual decontrol of food prices to increase market supplies and reduce dependence on imports. This policy aimed to enhance domestic production and stabilise food availability.
4. Import Duty Reduction: Chetty reduced peak import duties significantly, which helped to encourage imports of essential goods while attempting to balance foreign exchange reserves.
5. Promotion of Production: He focused on increasing production across various sectors, particularly textiles, to address shortages and improve self-sufficiency in essential commodities.
6. Tax Reforms: The budget included provisions for income tax adjustments aimed at increasing revenue while ensuring that tax burdens were manageable for citizens.
7. Public Expenditure Management: Chetty emphasised the importance of prudent public expenditure management, advocating for cuts in non-essential spending to prioritise development projects and essential services.

10 Amazing Facts About the First Union Budget

1. Historic Presentation: The first Union Budget of independent India was presented by Finance Minister R.K. Shanmukham Chetty on November 26, 1947, marking a significant moment in the nation's financial history.
2. Interim Budget: This budget was an interim one, covering a period of seven and a half months from August 15, 1947, to March 31, 1948, due to the partition and its economic implications.
3. Total Expenditure: The total estimated expenditure for this budget was ₹197.39 crore, with approximately ₹92.74 crore (about 46%) allocated for defense services, reflecting the immediate security concerns of the newly independent nation.
4. Economic Challenges: The budget addressed significant economic challenges, including inflation and the need for stability following the partition, which had disrupted agricultural and industrial production.
5. First Use of "Interim Budget": Chetty's budget was the first to officially use the term "Interim Budget," a practice that has continued in subsequent years when elections are held.
6. Focus on Development: The budget aimed to lay the groundwork for India's economic development, emphasising the need for balanced growth despite the challenges faced.
7. Budget Structure: The budget is classified into Capital and Revenue Budgets, with capital budgets focusing on long-term investments and revenue budgets dealing with day-to-day government expenses.
8. Post-Independence Context: This budget was crucial in setting the financial tone for a newly sovereign nation and addressing the needs of its diverse population.
9. Legacy: R.K. Shanmukham Chetty's presentation is remembered as a pivotal moment that shaped India's fiscal policy in its formative years.
10. Upcoming Union Budget 2025-26: As of January 2025, Finance Minister Nirmala Sitharaman is preparing to present the Union Budget for 2025-26, continuing the tradition established by her predecessors in shaping India's economic future.

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