Who is Known as the Father of the Indian Budget? Find Out Here!

Did you know that India's first Union Budget was presented on April 7, 1860, by Scotsman James Wilson? 

The Union Budget is crucial for India's development. It outlines the government's financial plans, detailing how resources will be allocated to various sectors. This ensures that funds are used effectively for the country's growth.

The forthcoming Union Budget for the fiscal year 2025-26 will be presented by Finance Minister Nirmala Sitharaman in Parliament on February 1.

The budget has always been a mirror of India’s journey, reflecting its challenges and triumphs. It’s not just about spending and saving; it’s about building a legacy.

Speaking of legacies, do you know who presented the first-ever budget in India? In this article, we'll explore the history of India's budgeting, the key figures involved, and how the Union Budget has evolved.

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Who Presented the First Budget of Pre-Independent India?

Source: Wikipedia

James Wilson presented the first Union budget on April 7, 1860. He was the finance member of the Indian Council and the founder of The Economist newspaper.

He introduced the union budget mainly to tackle the financial turmoil that arose after the Sepoy Mutiny of 1857. After this revolt, the British government faced significant financial challenges, including high military expenses and debts. 

To create a stable tax structure and reform the financial system, Queen Victoria sent Wilson to India. His budget aimed to create a sustainable revenue model for the British administration in India. 

He introduced income tax, which became a major source of revenue, and implemented a new paper currency system. The British government initially considered introducing direct taxes but lacked clarity on how to implement them. They also proposed a poorly designed license tax bill. 

However, when James Wilson arrived, he scrapped this plan and introduced two streamlined bills: an income tax and a revised license tax. 

In his financial statement, he declared that individuals earning less than Rs 200 annually would be exempt from taxes. Inspired by the English system, Wilson also instituted an appropriation audit to monitor monthly spending accounts.

Entrusted with resolving the financial difficulties in post-revolt India, he made remarkable contributions within a short period. 

Wilson's efforts were focused on stabilising the economy and ensuring that the British government could effectively manage its finances in India during a time of turmoil.

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Who Presented the First Budget of Independent India?

Source: The Economic Times

The first Union Budget of independent India was presented by R.K. Shanmukham Chetty on November 26, 1947. 

This budget came just three months after India gained independence from British rule. As the first Finance Minister of India, Chetty aimed to lay a solid foundation for the country's economic framework during a time of significant transition and challenges. 

His budget focused on addressing pressing issues such as inflation and the need for economic stability while also outlining revenue and expenditure plans for the newly independent nation.

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Who is Known as the Father of the Indian Budget? Let’s Find Out!

Source: The Statesman

Professor Prasanta Chandra Mahalanobis, a prominent Indian statistician and scientist, is often referred to as the "Father of Indian Budget." The reason why he is often hailed as the "Father of the Indian Budget" is as follows:

• He has made significant contributions to the statistical methods that underpin economic planning and budgeting in India. 
• His work laid the foundation for data-driven decision-making in government policies, particularly during the formulation of India's Five-Year Plans.
• Mahalanobis established the Indian Statistical Institute in 1931, which became a hub for statistical research and education. 
• He played a crucial role in developing methodologies for large-scale sample surveys, which provided essential data for economic planning.
• His model, known as the Mahalanobis Model, was instrumental in shaping the Second Five-Year Plan, emphasising industrialisation and economic growth.

By integrating rigorous statistical analysis into the budgeting process, Mahalanobis ensured that economic policies were based on reliable data, making him a key figure in India's financial history and earning him this recognition.

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Who was Prasanta Chandra Mahalanobis?

Prasanta Chandra Mahalanobis, born on June 29, 1893, in Calcutta, India, was a prominent statistician and physicist. He completed his undergraduate studies in Physics at the University of Calcutta. 

Later he pursued his further education at King's College, Cambridge, where he developed a keen interest in statistics. His early work laid the foundation for his future contributions to statistical science in India.

Founding of the Indian Statistical Institute

In 1931, Mahalanobis founded the Indian Statistical Institute (ISI) in Calcutta, which became a premier centre for statistical research and education in India. Under his leadership, ISI played a crucial role in shaping the field of statistics in the country and continues to be influential today.

Contributions to Statistics

Mahalanobis Distance: One of Mahalanobis's most significant contributions is the Mahalanobis distance, a statistical measure used to determine the distance between a point and a distribution based on multiple variables. 

This concept is essential in various fields, including machine learning and cluster analysis. The measure allows for comparisons that account for correlations between variables, making it a powerful tool in multivariate analysis.

Sample Surveys and Economic Planning: Mahalanobis was instrumental in developing methodologies for large-scale sample surveys. He established the National Sample Survey (NSS) and the Central Statistical Organisation (CSO), which are vital for collecting and analysing socioeconomic data in India. 

His work significantly influenced India's economic planning, particularly during the formulation of the Second Five-Year Plan (1956-1961), which emphasised industrial development.

Recognition and Legacy

For his pioneering contributions to statistics and economic planning, Mahalanobis received numerous accolades, including the Padma Vibhushan, one of India's highest civilian honours, in 1968. 

He served as an honorary statistical advisor to the Government of India and held various prestigious positions within international organisations, including the United Nations.

Mahalanobis passed away on June 28, 1972, but his legacy endures through his foundational work in statistics and its application to social and economic issues in India.

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