Updated: February 1, 2018 2:44:26 pm
Periodic fiscal planning, or the budget, is one of the most crucial administrative requirements of any government, on account of the far reaching consequences it has on the lives of every citizen, be it the tall and mighty or the common man at the grassroot level. The remarkable impact of financial planning can be noted from the way some of the most important rulers of our country’s past have paid attention to shaping it. On the day Finance Minister Arun Jaitley tabled the Narendra Modi-led government’s budget, we take a look at how ruling dynasties like the Mauryas, Khaljis, Mughals or the British have been recorded in the pages of history for the remarkable achievements they made in the economy of the territory they ruled.
Founded by Emperor Chandragupta Maurya in 322 BC, the Mauryan empire had stretched across vast portions of North India, centered around the Indo-Gangetic plain. The Mauryas are often believed to be the largest empire of that the Indian subcontinent had seen during its time. Reputed for producing some of the most ambitious rulers in Indian history, the Mauryas were also noted for their remarkable administrative system, economic governance being the most important part of it.
It is believed that the Mauryan administrative system was guided by the political thinker, Kautilya’s treatise on statecraft called “Arthshastra”. The Mauryas, having crushed a large number of small and regional kingdoms, had managed to produce a unified territory under its ruling. Accordingly, peasants were freed of taxes and crop collections from regional rulers, and a common taxation system was formulated. The Mauryan army wiped out a large number of local chieftains and even bandits who went about demanding revenue returns from the weaker sections. Chandragupta Maurya improvised a common currency system and created a regiment for collecting revenue from the citizens. Under Ashoka’s reign, international trade also developed particularly with the Greek and Hellenic kingdoms. Consequently, the emperor kept aside a significant portion of revenue for sponsoring roads and waterways.
The establishment of the Khalji dynasty was considered revolutionary in the sense that after the Mauryas in the previous millennium, it was only during the rule of the Khaljis in the thirteenth century that a major ruling dynasty spread itself across large portions of the Indian subcontinent. Particularly, under Alauddin Khalji, the empire stretched into Western, Central and Peninsular India. But apart from the territorial ambitions of the Khalji monarch, it was his administrative and revenue system that is considered unique in Medieval Indian times. Considering the traditional rural chieftains to be particularly disruptive in efficient revenue collection, Alauddin is believed to have eliminated them and then imposed a direct Kharaj tax amounting to a maximum of 50 percent of the agricultural produce.
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Having eliminated the traditional chieftains, he abolished the intermediary tax that the peasants paid to them, thereby winning their confidence. However, the direct tax demanded by the monarch was so high that it often left the people impoverished. Further, the tax structure was such that the rich and powerful lands were forced to pay a higher tax than others. He further demanded four-fifths of war spoils from his soldiers. In order to maintain the highly structured revenue system designed by him, Alauddin employed a large number of people as collectors and accountants. The revenue system of Alauddin Khalji is often regarded to be the longest sustaining kinds to have been formulated by any medieval Indian ruler.
Founded in 1526 by Babur, the Mughal empire at its peak had covered almost the entire Indian subcontinent and parts of Afghanistan. It is believed that during the seventeenth century, the empire had gained the currency of being the largest economic power in the world, accounting for more than 20 percent of the world’s GDP. While each of the Mughal rulers made noteworthy administrative reforms, the rule of Emperor Akbar has been particularly noted for the achievements made in the economy, commerce, and culture.
Under Akbar’s rule, the Mughal empire increased its size and strength multiple times. His religious and social reforms is famed to have won the confidence of the native population, particularly the non-Muslims. Akbar adopted the taxation system introduced by Sher Shah Suri and reformed it further. Accordingly, taxes were based on the area and productivity of a piece of agricultural land. The system was reformed in 1580 and a system called the dahsala was adopted. As per the requirements of the new system, tax revenue was calculated as one-third of the average produce of the last ten years. Further, he decentralised the system, employing local zamindars for revenue collection, who were, in turn, paid a portion of the revenue. However, the one tax reform that Akbar’s reign is most famed for is that of abolishing the Jizya tax on non-Muslims, which went on to bestow on him the repute of religious tolerance.
Modern India’s first budget was presented by James Wilson in February 1869. He was the Finance Member of the India Council that advised the Viceroy of India. Previously a hat maker in London, Wilson was employed in the India Council after the revolt of 1857 when the British government realised that they could never govern the country indirectly through the East India Company. Wilson is known to have introduced for the first time, a budgetary system in India based on the English model. He consolidated the threads of finance that had been disrupted by political revolutions.
The complexity of developing a finance system for India lay in the country’s unique diversity. The taxation system, before the coming of Wilson had been patchy and unregulated. The revolt, however, made evident the need for stronger centralised control. Thereafter, Wilson introduced the concept of an income tax. Wilson aimed at having a balanced budget and a taxation system that did not interfere with people’s economic behaviours. The introduction of the Income-tax, however, was a cause of great disappointment to several sections of the Indian population. The Marwari traders and the zamindars were particularly unhappy with the taxation measure as they believed it disrupted their economic positions. However, Wilson was so devoted to the system he had introduced that it is popularly believed that on his deathbed few of his last words were “take care of my income tax.”
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