Union Finance Minister Nirmala Sitharaman will present the 15th Budget of the Narendra Modi- led NDA government on February 1. This year’s Budget will be a milestone for Sitharaman as she will be presenting the annual financial statement a record ninth time in a row. Interestingly, this is the first time the Union Budget will be introduced in the Lok Sabha on a non-working day (Sunday).
Nirmala Sitharaman, who became India’s first full-time woman Finance Minister in July 2019, presented her first Budget the same year. Since then, she has delivered seven full Budgets. In 2024, she presented an interim Budget, as it was an election year.
Till date, India has presented 79 Union Budgets (counted based on annual financial year), including the interim Budgets presented before general elections, as they too are considered as Union Budget.
Ahead of 2026 Union Budget, here is a comprehensive analysis of how the Budgets have influenced India’s economy.
What is a Union Budget
The word Budget, derived from French word ‘Bougette’, means leather briefcase. However, there is no reference of the word Budget in the Constitution of India. Yes, instead of using the term Budget, our Constitution talks about it in Article 112 and refers to it as the Annual Financial Statement— the government’s financial plan for the year, which estimates revenue and expenses for the fiscal year from April 1 to March 31.
The Budget is presented in two parts: the revenue budget, which deals with income and expenses for daily operations, and the capital budget, which includes investments in long-term projects and assets.
Journey of India’s Budget
The Union Budget reflects India’s economic priorities and political thinking. When India became Independent, it inherited an economy that was broken and shattered— a wealth that had to be shared between the partitioned countries. The 200- year colonial British regime had emptied India’s treasury.
The country that was referred to as ‘Golden Bird’ accounting for nearly 24 per cent of the world’s GDP was reduced to less than four per cent when British exited India. Poverty and hunger were the major challenges as life expectancy stood at mere 32 years. While famines and drought had completely reduced people to poverty, there was no hope for industrial growth, it was stifled.
Amid food shortages, refugee rehabilitation and the scars of Partition, RK Shanmukham Chetty presented the first Budget. The framework of the Budget counted on survival strategy based on scarce resources rather than development agenda.
Development agenda takes priority in 1950s
Inspired by Soviet Union, India followed socialist model. Therefore, the Budgets of the 1950s-60s reflected development agenda based on Five- Year Plans. A large chunk of funds was allocated on dams, steel plants, public sector enterprises, and academic institutions with an eye on development.
Introduction of Wealth Tax in 1957-58 Budget by then Finance Minister TT Krishnamachari was one of the historic Budgets that aimed to reduce inequality and broaden the tax base. The government expanded its fiscal toolkit through this tax. It remained part of India’s tax law until it was abolished in 2015.
Taxation policy becomes aggressive in 1970s
By late 1970s, vote-bank politics influenced major decisions. With poverty alleviation campaigns taking the forefront, aggressive socialism, focused on redistribution, became a major highlight of Budgets during that era. Nationalisation of Banks and high taxation policies were the hallmark of the Budgets presented during those times. In fact, the 1973 Budget presented by Yashwant Rao Chavan was known as the ‘Black Budget’. Presented post 1971 Indo-Pak war, it exposed the fiscal deficit of the government, which accounted to nearly ₹550 crore, coupled with rising oil prices, and food shortages.
Guarded reform policies in 1980s
Late 70s and early 80s saw significant changes in Indian polity, which in turn shaped our economy. The regime change post Emergency also reflected in the Budget presented by the then government. The focus of Budget shifted to middle class when Janata Party came to power. Simpler slabs, lower wealth tax, pro-farmer push with higher allocations for agriculture and better MSP supply for farmers indicated a common man friendly Budget. The 1980s Budgets hinted at change. Technology imports were eased, MODVAT (Modified Value Added Tax) was introduced to reduce cascading taxes, and some industrial controls were relaxed. The 1986 Budget, often referred to as the ‘Carrot and Stick’ Budget, for coming down heavily on tax evaders Black marketers, and smugglers, presented by VP Singh Budget 1986 under the Congress government took steps to abolish License Raj in India.
However, these years also saw rising fiscal deficits and external borrowing.
Economic Liberalisation and game changing policies in 1990s
The balance of payment crisis that had pushed India into a brink of fiscal crisis in 1990 turned out to be a game changer in Indian politics and the economy. History was created when Dr Manmohan Singh, the Finance Minister in the PV Narasimha Rao government presented the 1991-92 Budget. The Budget opened doors for reforms and ushered in an era of liberalization. Coupled with privatization and globalization, the Budget removed restrictive licenses, deregulated industries, and opened the Indian economy by allowing foreigners to invest in India.
While the 1991 Budget changed the economic trajectory of the country by bringing in foreign capital, boosting the country’s economic growth, the 1997 Budget was ‘Dream Budget’ as it gave relief to commoners by cutting income tax rates and gaining trust of taxpayers and market.
Striking a Balance between growth and welfare key in 2000s
Post stabilization of the economy, the country changed its strategy and tried to balance reforms with social spending. To expand its welfare network, subsequent government focused on welfare schemes such as Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) while at the same time maintaining fiscal discipline through Fiscal Responsibility and Budget Management (FRBM) Act 2003. Despite global recession in 2008, India continued to rely on its welfare schemes, though it adopted stimulus-heavy Budgets to protect growth.
Structural reforms get huge boost post 2014
After assuming power in 2014, Narendra Modi- led NDA government pushed for economic reforms aggressively, which reflected in their Budgets. The Budget present by Finance Minister Arun Jaitley in 2015-16 redefined welfare delivery using technology by bringing in Jan Dhan–Aadhaar–Mobile (JAM) allowing people to become direct beneficiaries of government schemes.
Roll out of Goods and Services Tax (GST) in 2017 that paved the path for a unified indirect tax system was a historic move that has played a significant role in streamlining tax system in the country.
Moreover, post Pandemic the shift of our Budgets towards public investment-led growth, with focus on infrastructure, manufacturing towards making India Atma Nirbhar highlights the journey of India— from a fragile to becoming the fourth largest economy in the world.
From rebuilding a broken economy in 1947 to financing a trillion-dollar digital future today, the Budget has evolved from a bookkeeping exercise into a powerful instrument of nation-building.
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