India’s Budget, like its Parliamentary system, is a British legacy. No, no, before you jump to conclusions, let me assure you that the now familiar M man has nothing to do with this one. And here’s another promise: none of those high-sounding jargon that seem lost on the primetime pundits and panelists themselves including the one delivering them. And no number crunching either. So hang me if I use the phrase ‘fiscal deficit’ … again. But back to the beginning …
British dominion over India may be assumed to have started with the Battle of Plassey in 1757, but obviously there were not 190 colonial budgets till 1947. The British budgeting system was superimposed in a nascent form on Bharat only from 1859, a year after the Queen’s proclamation that made it a part of the Empire. Before that, for a century there were only records and estimates in a semi-formal manner of the East India Company. In a predominantly agrarian economy, the key source was land revenue and the Company invented ingenious methods of extracting taxes from its colony; just recall Kattabomman’s famous dialogue and you will get the gist … and the list too — kisthi, thirai et al. But that said, as the Company’s influence and hold spread, it cast its tax net wider thus reducing its dependence on the unreliable agriculture and also pushing the entire country into an oppressive tax regime.
And post 1859 the budget had a slow and steady evolution process, but the prime motive of maximising revenue for the Raj remained paramount. Now, as ‘free’ Indians we have been brought up on the idea that the British drained India and enriched themselves for nearly two hundred years. Now, does all this booty reflect in the colonial budgets? Well, not in black and white, say, under the head ‘Loot from Bharat’ in the British budget with a corresponding entry, Loot to Britain’ in the Indian budget, just as there are no nomenclatures as Bofors or Fodder or Spectrum in the present budgets. But according to historians, both Indian and British, the drain was perennial and substantial.
An early East India Company record says this: ‘The importance of that immense empire (India) to this country (Britain) is rather to be estimated by the great annual addition it makes to the wealth and capital of the Kingdom’. And later in Queen’s India, the exploitation took many forms like Home charges, unfair trade, financial transfers, Britishers’ salaries, administrative costs and the like with some nominal accretion to India’s public assets, that too only when it suited the colonial admin. A British historian Madisson says: ‘There can be no denial that there was a substantial outflow which lasted for 190 years. If these funds had been invested in India they could have made a significant contribution to raising income levels. The total drain amounted to about 1.5 per cent of national income of undivided India from 1921 to 1938 and was probably a little larger before that … about a quarter of Indian savings were transferred out of the economy, and foreign exchange was lost which could have paid for imports of capital goods …’. And India paid liberally for Britain’s military ventures too, including the two World Wars. The white man probably decided to unload his burden and quit because their budgets proved India was no longer a viable project, for colonial considerations were always subject to cold calculations!
So when RK Shanmugam Chetty presented the first budget of Independent India on Nov 26, 1947, he had very little to budget with. And in many ways other than money. The fledgling nation was just 100 days into freedom. The next budget was just another 100 away. But worse, the nation stood partitioned, a factor that permeated his budget speech just as recession does today. And his second budget, the first full one really, presented on Feb 29, 1948 was with in days of the Mahatma’s assassination and therefore had a liberal homage built in. But from the point of view of finance, that budget was dominated by the settlement of accounts with Pakistan, which according to RK was, ‘generous and liberal’. On Aug 14, undivided India was in debt, primarily owed in Pound Sterling to the British as pensions, unpaid salaries etc for the English staff for ‘taking care of us for this long’! The siblings divided this debt at birth. The midnight children’s ‘negative inheritance’ has since been a continuous legacy.
Over the next sixty two years, as many budgets have been presented by 21 FMs. Five of those FMs became PMs. One, RV, became President. PMs Nehru and Indira also doubled up as FMs on occasions. Manmohan and Yashwant Sinha presented five consecutive budgets. Up to 1998, the FMs followed the colonial system of rising from their seat at sunset to present the budget. From 1999, the budget emerged from twilight to see the light of day, but only in the metaphorical sense. Otherwise, w.r.t. to facts and figures, it was business as usual. But some budgets have been watersheds. RKS Chetty’s first budget of 1947 did not have any new tax proposals. But all subsequent budgets of a ‘socialist’ India were quite ‘taxing’ what with the need to feed, educate and employ its teeming millions causing a huge appetite for public funds. And the welfare state too had its symbolic say by invariably making cigarette the butt of a fresh tax! But the high-tax regime had its most obvious and disastrous consequence: a monstrous black economy, as large or even larger than the official one. Till date, India’s budgetary medicines only have limited impact mainly because much of the virus resides outside the body!
The first break from the socialist mould happened in 1985 under the PM-FM combo of Rajiv and ‘Weepy’ Singh. But it was the 1991 duo of PVN-MSingh who took the decisive turn. Since then, the national budget lingo has completely changed with once taboo words like reform, globalisation and liberalisation, entering the lexicon, well, liberally. PC’s dream-turned-nightmare of a budget of 1997 was another memorable one, but in the last 18 years, the pattern seems set. And with economic policy-making becoming a round-the-year activity, budget is no longer the sole tool or the be-all and end-all. An ugly flip side is that the stock markets have turned a major gallery for FMs whose budgets are ‘tested’ there first and fast. In that context the present FM’s indifference to the upheavals in that gambling den is most welcome, whatever the other pluses and minuses. Rural India deserved this one and more. Indeed, for that alone one can even forgive Pranabda’s English speech delivered in a Bengali dialect. And coming as did after Mamta’s Railway budget speech, reportedly in English, but actually sounding like chaste Bengali, one felt the urge to touch base with original angrezi from the alphabet onward. Now, is A for Opple? And sure, we also missed PC’s favourite Thirukkurals. But on second thoughts, better for that; I can’t imagine a ‘Bengali’ Thiruvalluvar!
And congratulations, me. For I have just presented a budget without any mention of def… No I don’t want to hang!
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