India's Budget history lies buried in Kolkata

Staff reporter, New Delhi
17/01/2019   0 Comments

When Finance Minister Arun Jaitley presents Budget 2019-20 on February 1, he would be filling the shoes of a man made invisible by the haze of history. In 1860, James Wilson, a Scotsman, created India's first Budget. He now lies buried in the Mullickbazar Cemetery in Kolkata. Founder of 'The Economist' magazine and what is today the Standard Chartered Bank, Wilson started out as a lowly hatmaker and taught himself to rise to the position of finance member in Viceroy Lord Canning's council in undivided India. He was also a Member of Parliament in England, Finance Secretary to the UK Treasury and Vice-President of the Board of Trade. 

Wilson arrived in India on November 28, 1859, two years after what the British call the Sepoy Mutiny and Indians their first War of Independence. The event had drained the resources of the government. The increased military expenditure had left it with big debts. Wilson, a self-taught economist with a deep knowledge of how the market worked, was seen to be the man who could salvage the grave financial situation. Wilson has another first to his name — introduction of an income tax act which created a big controversy. He argued since the British provided safe and secure environment to Indians to carry on trade they were justified in charging a fee in the form of an income tax. 

Wilson, a liberal and strong proponent of the policy of laissez-faire, however, failed to see the irony of Britishers first suppressing Indians and then demanding a tax for providing them a secure atmosphere. His magazine, The Economist, was sceptical of imperialism. It argued in 1862 that colonies “would be just as valuable to us...if they were independent”. An article by two Canadian researchers in 2016 analysed the writings on India of Wilson's magazine from 1843 to the 1860s. It argued that "despite the adherence of the paper to the ideas of laissez-faire nineteenth-century liberal ideas of political economy, its writing on India — and the political career of its founder and editor, James Wilson — demonstrate a ready embrace of empire, government intervention in the economy, and increased taxation. 

While Wilson's Budget gave India a valuable financial governance tool, his income tax act upset businesses as well as the landed class, the zamindars. Aversion to pay income tax, though understandable in colonial times, has persisted even 70 years after Independence. In December 2016, an income-tax official revealed that India had just 24.4 lakh taxpayers who declared an annual income of over Rs 10 lakh yet 25 lakh new cars, including 35,000 luxury cars, were being bought every year for the last five years.


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