India is gearing up for the Union Budget 2026, which will be tabled in the Parliament on February 1. The annual exercise takes us back to the long and complex history of the country's budgeting process.
The Union Budget enumerates the government's revenues, expenditures, and fiscal priorities. It shapes the direction of the economy for the year ahead.
The First Budget
India's first Union Budget was presented on April 7, 1860, by James Wilson, the finance member of the Indian Council and the founder of The Economist newspaper. At that time, the country was under British colonial administration.
The Budget was introduced against the backdrop of severe financial stress faced by the British government after the First War of Indian Independence in 1857, also known as the Sepoy Mutiny.
Following the failed rebellion, Queen Victoria sent James Wilson to India with a clear mandate to overhaul the financial system. His task was to stabilise government finances by creating a structured taxation framework and introducing a paper currency system. As part of these reforms, Wilson introduced income tax in India, a levy that continues to be one of the government's most important sources of revenue even today.
How James Wilson Reshaped Taxation System
Before Wilson's arrival, the British administration considered introducing direct taxes but lacked clarity on how to implement them effectively. There was also a proposal for a licence tax bill, which was widely seen as poorly structured.
Wilson scrapped this plan and instead brought in two well-defined legislations: an income tax and a revised licence tax.
In his financial statement, Wilson proposed that those earning less than Rs 200 a year would be exempt from paying taxes.
He also introduced an appropriation audit system based on the English model to keep a close watch on monthly expenditure accounts. As India's first finance officer, Wilson played a central role in addressing the financial challenges that followed the 1857 uprising.
Union Budget After Independence
After India gained Independence, the first Union Budget as a free nation was presented on November 26, 1947, by RK Shanmukham Chetty, the country's first finance minister. This Budget focused on economic stabilisation, rebuilding the nation after colonial rule, and setting the groundwork for long-term development.
In the decades that followed, the Union Budget was presented by several finance ministers, including P Chidambaram, Pranab Mukherjee, Yashwant Sinha, and Arun Jaitley, among others.
Since 2019, the responsibility of presenting the Budget has rested with Nirmala Sitharaman, who will once again table the financial roadmap this year.
