Who Introduced the First Budget in India After Independence?

The first budget of independent India: India gained independence on August 15, 1947. The first budget of independent India was presented on November 26, 1947 by the then Finance Minister RK Shanmukham Chetty.

The budget comes three months after India gained independence from British rule. This is a provisional budget for a period of seven and a half months, ending on March 31, 1948.

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The total expenditure is expected to be Rs 19,729 crore and the revenue target is Rs 171.15 crore. Notably, around Rs 9,274 crore (nearly 46%) was allocated to defense services, reflecting the country’s post-independence priorities.

In 2025, Finance Minister Nirmala Sitharaman will present the Union Budget for the financial year 2025-26. It will mark her eighth consecutive budget submission, continuing to shape India’s economic landscape in a crucial election year.

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Who is RK Shanmukham Chetty?

RK Shanmukham Chetty was born on October 17, 1892 in Coimbatore, Tamil Nadu, into a wealthy family of millers. He completed his education at Madras Christian College, where he studied economics, and later attended Madras Law College for a law degree. His early contacts with nationalist leaders influenced his political views and aspirations.

political career

Chetty began his political career in 1917 as a Coimbatore Municipal Councilor. 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 in 1931 to eliminate discrimination against untouchable groups. He served as the Dewan of the Maharaja of Cochin from 1935 to 1941 and implemented major administrative reforms.

Contributions as Minister of Finance

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In independent India, Chetty became the first finance minister and presented the first budget on November 26, 1947. The budget was designed to address the urgent economic needs of the newly independent nation.

Later life and legacy

Apart from politics, Chetty has contributed to various trade organizations and supported Tamil language initiatives. He founded institutions such as Tamil College in Peru and served as vice-chancellor of Annamalai University for a year.

RK Shanmukham Chetty died on May 5, 1953, leaving behind a legacy as an important figure in India’s early political landscape.

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What major economic policies did Chetty launch during his tenure as finance minister?

RK Shanmukham Chetty, as the first finance minister of independent India, launched several major economic policies during his tenure:

1. First Budget: He presented his first budget on November 26, 1947, with the aim of stabilizing the post-independence economy. The total expenditure is estimated at Rs 19,729 crore, with focus on defense and essential services.
2. Inflation control measures: Chetty stressed the need for a balanced budget to control inflation. He advocated a budget surplus to remove excess purchasing power from the economy, which was crucial in a period of rising prices.
3. Deregulation of food prices: He initiated the gradual deregulation of food prices to increase market supply and reduce dependence on imports. The policy aims to increase domestic production and stabilize food supplies.
4. Import duty reduction: Chetty has significantly reduced peak import duties, which will help encourage imports of essential goods while trying to balance foreign exchange reserves.
5. Boost production: He focused on increasing production in various sectors, especially textiles, to address shortages and increase self-sufficiency in basic commodities.
6. Tax Reform: The budget includes provisions for income tax adjustments aimed at increasing revenue while ensuring that citizens can manage their tax burden.
7. Public expenditure management: Chetty emphasized the importance of prudent public expenditure management, advocating the reduction of non-essential expenditures and prioritizing development projects and basic services.

10 surprising facts about the first Union Budget

1. A historic statement: On November 26, 1947, Finance Minister RK Shanmukham Chetty presented the first federal budget of independent India, marking an important moment in the country’s financial history.
2. Provisional Budget: Due to Partition and its economic impact, this budget is a provisional budget covering the period of seven and a half months from August 15, 1947 to March 31, 1948.
3. Total expenditure: The estimated total expenditure of this budget is Rs 19,739 crore, of which approximately Rs 9,274 crore (approximately 46%) is allocated to defense services, reflecting the pressing security concerns of the newly independent country.
4. Economic Challenges: The budget addresses significant economic challenges, including inflation and the need for stabilization following Partition, which disrupted agricultural and industrial production.
5. First use of ‘interim budget’: Chetty’s budget was the first to formally use the term ‘interim budget’, a practice that was continued in subsequent elections held in the following years.
6. Focus on development: The Budget aims to lay the foundation for India’s economic development, emphasizing the need for balanced growth despite challenges.
7. Budget structure: The budget is divided into capital budget and revenue budget. Capital budget focuses on long-term investment, and revenue budget involves daily government expenditure.
8. Post-independence context: The budget was critical in setting the fiscal tone of the new sovereign and meeting the needs of its diverse population.
9. Legacy: RK Shanmukham Chetty’s speech is considered a key moment in shaping the formative period of fiscal policy in India.
10. Upcoming Union Budget 2025-26: As of January 2025, Finance Minister Nirmala Sitharaman is preparing to present the Union Budget 2025-26, continuing the legacy established by her predecessor in shaping the future of the Indian economy.

Source: https://dinhtienhoang.edu.vn
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