The Man who created India’s First-ever Budget

It’s that time of the year again when the entire country waits keenly for the single piece of document that will determine many of their financial decisions in the year ahead. The general budget 2019 will be here in a matter of days and while there is no dearth of information about the annual government exercise, not much is known about the man who had brought India’s first-ever budget.

It was a Scotsman named James Wilson, the founder of what is today the global behemoth Standard Chartered Bank, who created India’s first ever budget in 1860. Wilson was also the founder of the widely read magazine ‘The Economist’.

Having begun his career as a humble hat-maker, Wilson taught himself enough about finance and economics as the years passed, and eventually rose to the position of finance member in Viceroy Lord Canning’s Council in undivided India. He was also a member of the British Parliament, besides being Finance Secretary to the UK Treasury and Vice-President of the Board of Trade.

Wilson first arrived in India in 1859, at a time when the British government here was hard beset by Financial stress in the wake of what the British called the Sepoy Mutiny and Indians their first War of Independence. Increased military expenditure had drained the government’s resources, leaving with huge debts. Wilson, with his deep knowledge of how the market worked, was seen as the man who could salvage the situation.

He introduced for the first time in India a financial budget framed upon the English model – inspired the public mind with fresh confidence – brought together with the threads of finance which had been broken and scattered by a military and political convulsion – stimulated the operations of the Military Finance Commission to review the numerous branches of civil expenditure – reviewed the existing system of audit and account – besides discharging the multifarious duties developing on a Finance minister and a member of the general government.

James Wilson was also the man behind the introduction of the income tax act – a hated move that gave rise to a huge controversy. While he gave India an invaluable financial governance tool by way of his budget, his income tax act deeply dismayed businesses as well as zamindars, the landed class. His argument was that because the British government provided Indians with a safe environment for trade, they were justified in charging a fee in the form of an income tax. It, however, cut little ice. Aversion to pay income tax in India has persisted to this day.

Wilson was a liberal and strong proponent of the policy of laissez-faire. His magazine, The Economist was doubtful about imperialism – it argued in 1862 that colonies would be just as valuable to us if they were independent. It, however, did believe in the idea of the white’s man burden basically the essence of colonialism saying that “uncivilized races” were owed “guidance, guardianship and teaching”.

A 2016 article by two Canadian researchers analyzed the Economist’s writings on India from 1843 till the 1860s. It argued: “Despite the adherence of the paper to the ideas of laissez-faire nineteenth-century liberal ideas of political economy, it's writing on India – and the political career of its founder and editor, James Wilson – demonstrate a ready embrace of an empire, government intervention in the economy, and increased taxation. The article suggests this difference can be explained by the expression of colonial difference and attitudes to race.