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History of Union Budget
History of Budget
• During the forties, the focus was on recovery from partition. Initial budgets were
geared towards the slow rebuilding of the country and its economy.
• Growth of trade was an important objective of the budgets but with the world also
in a slow recovery from the second world war, the going was tough for India.
40’s & 50’s
• The socialist pattern adopted by the country was a pillar that guided the budgets in
• The base was being laid for the heavy industries and projects that came to mark the
country’s initial burst of economic activity.
40’s & 50’s
• The budget tried to raise resources both
internally as well as externally but there
was still a lot of reliance on foreign aid.
• The two wars that the country fought took
a toll on the budget and defence
expenditure had to be beefed up.
• Expenditure continued towards the state
run enterprises which were the tools of
realising the socialist vision of the country.
• The early seventies saw the budget giving encouragement to small enterprises so as
to breed an army of entrepreneurs in the country.
• There was a focus on urban areas including price controls so as to develop housing
and other facilities for the large number of people living in cities.
• Growth continued to lag at around 3.5% on an average. So the budget tried to
undertake efforts to give a boost to bring it up to the 5%.
• Budgets also tried to ensure that the various targets set out in the 5 year plans were
• Inflation reared its ugly head in the early eighties and a part of the budget was
directed towards fighting the impact of this high inflation.
• By the mid-eighties the rise in the government expenditure started to hurt. Fiscal
deficit rose sharply and the entire effort was to curtail that.
• The budget also focused on development so as to ensure that this requirement
was not forgotten in the rush to meet other expenditure.
• There was also a lot of emphasis on social spending in the budget to provide
benefits to the poor in the country.
• The country faced a serious crisis that led to pledging of gold. Foreign exchange
reserves fell to record lows. Tackling this was a big target in the early budgets of the
• Liberalisation of the economy and freeing up of the license raj were some of the other
notable goals that the budget sought to achieve.
• Inflation reared its head once again and there were also efforts to tackle this because it
hurt the poor and the needy the highest.
• Recovering from the very slow growth early in the decade also took a lot of space in
the budget and this also turned out to be a success.
• The next round of reforms was laid out in the budget in the first few years of the
• Fiscal adjustment and increasing the growth targets were some of the important
goals that the budget aimed at during the decade.
• Sustaining the high growth rates in the economy became a challenge for the budget
as the world slipped in a big economic recession following the bust of the housing
• Increasing efforts were made by the budget to bring down tax rates and increase
• The Indian economy was also sought to be integrated with the world economy in
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