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Four most famous budgets that changed India that change India's economy

Finance Minister Piyush Goyal will present the Interim Budget in the Lok Sabha on 1st Feb 2019 that could virtually be a full-fledged budget of the Modi government ahead of the Lok Sabha elections. As we are heading to this year's budget day – Let’s see in the past and check five budgets that had significant impact on India for years.

 

The Epochal Budget (1991)

The Epochal Budget as it was called, presented by Manmohan Singh in 1991. The country was going through a precarious balance of payments and the budget was presented amid the Indian economic crisis, which marked the beginning on economic liberalisation. The then Finance Minister Manmohan Singh had stated, " There is no time to lose. Neither the Government nor the economy can live beyond its means year after year. The room for manoeuvre, to live on borrowed money or time, does not exist anymore. Any further postponement of macroeconomic adjustment, long overdue, would mean that the balance of payments situation, now exceedingly difficult, would become unmanageable and inflation, 3 already high, would exceed limits of tolerance. For improving the management of the economy, the starting point, and indeed the centre-piece of our strategy, should be a credible fiscal adjustment and macro-economic stabilisation during the current financial year, to be followed by continued fiscal consolidation thereafter. This process would, inevitably, need at least three years, if not longer, to complete. But there can be no adjustment without pain. The people must be prepared to make necessary sacrifices to preserve our economic independence and restore the health of our economy” 

Under the Narasimha Rao government, overhauled the import-export policy and took measures to make Indian economy more global trade friendly. The customs duty was slashed from peak 220% to 150% and steps were taken to promote exports. Arguably, it was after this budget, India in the next two decades turned out to become one of the fastest growing emerging economies in the world.

 

The Black Budget (1973)

Former Finance Minister Yashwantrao B. Chavan presented this budget on February 28, 1973, The Black Budget is a term used for budgets because it allocates fund for secret or classified projects., He got this name due to the high budget deficit, which at the time was Rs 550 crore.

Budget also provided Rs 56 crore for the nationalisation of the general insurance companies, Indian Copper Corp, and coal mines. He aimed at allowing the uninterrupted supply of coal in line with the growing demand for coal in industries like power, cement, and steel.

He aimed at allowing the uninterrupted supply of coal in line with the growing demand for coal in industries like power, cement, and steel.

At the time, he also believed that the interest of mine workers would be best served in a government-run set-up.

His decision to do so is believed by many, to have had an adverse effect on coal production in the long run as bundling of coal assets under a single government-owned entity meant there was no scope for competition within the market. Furthermore, reports suggest that due to this decision, there remained little incentive for deployment of efficient production techniques and the introduction of new technologies in the coal industry.

 

The Dream Budget (1997)

Former Finance Minister P. Chidambaram unleashed high octane tax reforms in his "dream" Budget for the year 1997-98. His predecessor Manmohan Singh might have saved the country the blushes with his path-breaking Budget of 1991, but the government he belonged to was voted out of power in 1996. Economic reforms were increasingly being seen as anti-poor. The budget was called the Dream Budget by media because under the United Front government, made significant changes to bring down personal income tax and corporate tax. Chidambaram brought down the highest personal income tax rate from 40% to 30%, did away with many surcharges and slashed royalty rates. The lower tax rates helped increase compliance and were welcomed by common people.

 

The Millenium Budget (2000)

Finance Minister Yashwant Sinha presented this budget on February 29, 2000 with an intention to promote India as a major software development hub. The introduction of software export led to an exceptional growth in the Indian IT industry, which was hailed as a courageous decision by policy experts. His decision to phase out incentives coupled with lower customs duty on 21 items, including computers and CD Roms, for the IT sector, led to the growth of the sector.

 

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