Every year, the Union Budget not only sets the tone for India’s economy in the ensuing fiscal year but also make or break household budgets. Some Budgets over the years have also acted as milestones in India’s development trajectory.
Here are five iconic Budgets across the years:
1991 Budget – This is the best-known Budget since independence. This Budget began the process of economic liberalisation in India. Dedicated to the memory of former Prime Minister Rajiv Gandhi, who then had recently been assassinated, the Budget came in the backdrop of a Balance of Payments crisis which threatened to bankrupt India. The Budget introduced changes in import-export policy, reduced import licensing and promoted exports. The budget encouraged foreign investment into Indian industry and laid the foundation for Indian companies to face global competition. “It would expose our industrial sector to competition from abroad in a phased manner,” then Finance Minister Dr Manmohan Singh said.
1997 Budget – Dubbed the “Dream Budget” by the Indian media, the then Finance Minister P Chidambaram’s first Budget was noted for its bold reforms amid the political uncertainty around the ruling United Front government. The Budget unleashed major tax reforms. The maximum marginal income tax rate was reduced to 30 per cent from 40 per cent. Taxes on domestic and foreign companies were reduced from 40 per cent and 55 per cent to 35 per cent and 48 per cent respectively. The surcharge on corporate tax was also abolished.
1986 Budget – The Union Budget presented by VP Singh is considered the starting point for reforms in India’s indirect taxation. He introduced MODVAT (Modified Value Added Tax) scheme which allowed the manufacturer to obtain instant and complete reimbursement of the excise duty paid on the components and raw materials. The new tax also intended to help manufactuers avoid double taxation and tax burden. “MODVAT scheme provides a transparency which discloses the full taxation on the product and its introduction is an important measure of cost reduction,” he had said.
1957 Budget – This Budget was presented by TT Krishnamachari and is known for introducing several taxes, especially the wealth tax, which remained in force till 2016. The tax on wealth was introduced with an eye to curb the possibility of evasion. “…The system of taxation on incomes has to be supplemented by taxation based on wealth. This (wealth tax) is more equitable,” Krishnamachari had said. In addition, the Budget also imposed restriction on import through an import licensing system in a bid to improve the country’s balance of payment situation.
1970 Budget – The Union Budget was presented by the then Prime Minister Indira Gandhi, who became the first woman to hold the finance portfolio. Though she broke the glass ceiling, the 1970 Budget is now known for increasing the tax burden. That year, the Budget increased the marginal tax rate by 11 percentage points to 93.5 percent on all incomes above Rs 2 lakh. In her speech, she stressed on the need for a larger tax base to continue the “requirements of growth and social welfare” and proposed to withdraw some of the concessions to restrict people from avoiding taxes.
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