On 26 November 1947, a tall, impeccably dressed man carrying a leather briefcase, posed for the cameras in a rather stoic fashion. He then walked into the Parliament building to make history. R.K. Shanmukham Chetty, India’s first Finance Minister, was familiar with all the faces in Parliament that day. The last time he saw them all together was on 30 August that year - when the Constituent Assembly last met. Now in November, the Assembly was acting as India’s legislature.
R.K. Shanmukham Chetty on his way to present the Budget, 1947
Image Credits: TimesNow
Chetty had hardly spoken in the Constituent Assembly since its first session in December 1946. But silence was not an option today – he was going to present independent India’s first budget. He stood up and said:
‘I rise to present the first Budget of a free and independent India. This occasion may well be considered an historic one and I count it a rare privilege that it has fallen to me to be the Finance Minister to present this Budget. While I am conscious of the honour that is implied in this position, I am even more conscious of the responsibilities that face the custodian of the finances of India at this critical juncture...’
Without dwelling too long on formalities, he swiftly addressed the elephant in the room: ‘Whatever might be the immediate political justification of partition, its economic consequences must be fully appreciated if the two dominions are to safeguard the interests of the ordinary man in both new States’. Chetty went on to suggest that the economic prosperity of India and Pakistan were linked, arguing for economic cooperation and integration taking into account the strengths and weakness of both countries.
He then provided a tour de force of India’s economic situation and presented his financial plan. The budget, he said, was an interim one necessitated by the Partition. It covered seven and a half months starting from 15 August 1947 up until 31 March 1948. The targeted revenue receipts were Rs. 171.5 crore, and the revenue expenditure stood at Rs. 197.39 crore, leaving a fiscal deficit of around Rs. 26 crores.
Budget priorities mirrored India’s political and economic predicaments of the time. Large portions were allocated to partition related relief and rehabilitation, and self-sufficiency in food grains, in light of the lakhs of refugees pouring in. The first Indo-Pakistan war of 1947 was still ongoing, and a whopping 47% of the total budget was allocated for defence expenditure alone.
Public reaction to the budget appeared to be mellow and devoid of any controversy or polarised debate. One newspaper cheekily titled their front-page report ‘Free India’s First Budget: ‘No Surprises', quoting Chetty's assessment of the budget itself. The massive difficulties arising out of partition and war meant that the independence movement ideal of a welfare state would have to wait. It was enough for the moment to ensure that India was not going to be bankrupt - and Chetty's budget was seen to broadly do that.
Chetty was the Finance Minister for a short period, and his tenure ended with controversy. It was alleged that he did not investigate certain mill owners who were suspected of evading tax. There seem to be two accounts of this controversy: the first argues that Chetty decided not to go after the mill owners by his own accord, the second suggests that Patel influenced Chetty. Eventually, Nehru forced Chetty to hand in his papers, bringing Chetty the unfortunate distinction of being the first minister in independent India who had to resign.
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