NEW DELHI: The Budget is not just an economic document or an annual statement of accounts of the central government – it’s the road map that sets the tone and direction of economic reforms and growth. It also signals policy direction to citizens, businesses and investors, shaping confidence and long-term economic outcomes. Over the last few decades, several Union Budgets in India have stood out for being reformist, transformational and path breaking.From Manmohan Singh’s landmark 1991-92 Budget that opened up the Indian economy and Chidambaram’s ‘Dream Budget’ to Jaswant Singh’s 2003–04 Budget and Nirmala Sitharaman’s new income tax regime measures, we take a look at some Union Budgets that stood out in the last few decades:
The performance principle: Pranab Mukherjee (1983-84) — When grants met accountability
On February 28, 1983, Finance Minister Pranab Mukherjee stood before Parliament and announced what he called “the somewhat unconventional step” of allocating Rs 300 crore to states based not on population or political negotiation, but on measured performance in implementing specific programmes.“Another Rs 125 crore would be distributed among the States on the basis of their performance in implementing programmes in identified areas of high priority.”Mukherjee told Parliament.
The budget documents specified the mechanism: states would receive funding only after demonstrating capacity to achieve targets above those implied in their approved plans. This was outcome-based federalism a decade before the phrase entered policy discourse.Beyond allocation mechanisms, the 1983-84 budget introduced what Mukherjee termed a “minimum tax” on corporate profits. His solution was structural. “I therefore propose to provide that fiscal incentives and concessions shall not absorb more than 70 per cent of the profits. This would secure that companies pay a minimum tax, on at least 30 per cent of their profits.” he said. The 1983-84 budget received limited attention at the time. India was emerging from drought, international attention was focused elsewhere, and the changes appeared technical. But the principles embedded in that budget—performance-based allocation, minimum taxation regardless of incentives, mandatory investment norms for tax-exempt entities—would recur in subsequent reforms.
The tax revolution: V.P. Singh (1985-86) — Simplification through structure
Two years later, V.P. Singh presented a budget that addressed what he termed the “counter-productive” nature of India’s personal income taxation. In his February 16, 1985 speech, Singh outlined a comprehensive approach to tax reform.
The changes were substantial. Singh raised “the exemption limit for personal income taxation from Rs 15,000 to Rs 18,000” which, he noted, would result in “around 10 lakh” assessees being removed from the tax net entirely. He restructured the rate schedule, reducing the number of slabs “from eight to four.”“The maximum marginal rate of income-tax on personal incomes will stand reduced from 61.875 per cent to 50 per cent,” Singh announced.On corporate taxation, Singh adopted the minimum tax principle from Mukherjee’s earlier budget, noting: “There are companies which are flourishing, but are paying no tax at all.” But he went further on depreciation policy. Recognizing that “the internal funds available with the corporate sector are inadequate” for modernization, he announced: “I propose to increase the general rate of depreciation in respect of plant and machinery from 10 per cent to 15 per cent.“For energy efficiency, the approach was more aggressive: “I propose to go farther and allow 100 per cent depreciation on devices and systems for energy saving.”The budget also began dismantling the industrial licensing system. “It is proposed to notify a list of industries for delicensing so that procedural delays are cut to a minimum,” Singh stated.
The institutional architect: Rajiv Gandhi (1987-88) — Building market infrastructure
When Prime Minister Rajiv Gandhi presented the 1987-88 budget on February 28, 1987, his focus was not merely fiscal but institutional. For education, the commitment was substantial. “To give a good start to the new Policy, I have allocated as much as Rs 800 crore for education as compared with Rs 352 crore in 1986-87,” he said. This represented more than a doubling of education expenditure in a single year.
This decision led to the establishment of the Securities and Exchange Board of India, which received statutory powers through legislation in 1992. Prior to SEBI, the Controller of Capital Issues regulated securities markets through the Capital Issues (Control) Act of 1947—a wartime measure designed for a controlled economy, not a liberalising one.Gandhi also announced expansion of the mutual fund industry beyond the monopoly of Unit Trust of India. “The State Bank of India will set up a Mutual Fund” to provide investors with additional options, he said. This was the first step toward creating a competitive mutual fund industry.
The crisis reformer: Manmohan Singh (1991-92) — From License raj to Liberalization, privatization and globalization
The Union Budget presented on July 24, 1991 marked a decisive break in India’s economic policy, which was later commonly called LPG or Liberalisation, Privatisation and Globalisation. The strategy was framed explicitly as a response to the balance of payment crisis. Addressing Parliament, Finance Minister Manmohan Singh argued that “over centralisation and excessive bureaucratisation of economic processes have proved to be counter productive,” leaving the economy less productive, less competitive, and acutely vulnerable to shock.The scale of the crisis was laid out in blunt terms. “The fiscal deficit of the Central Government… is estimated at more than 8 per cent of GDP in 1990–91,” Singh said, while “external debt… is estimated at 23 per cent of GDP.” Foreign exchange reserves had fallen to “Rs 2500 crores,” sufficient to finance “imports for a mere fortnight.” India, he warned, stood “at the edge of a precipice.”The policy response was structural rather than incremental. Industrial licensing was dismantled across most sectors as the government moved to “bring about a significant measure of deregulation in the domestic sector.” Trade policy shifted “from a regime of quantitative restrictions to a price based mechanism,” reinforced by exchange-rate adjustment and export promotion, while monopoly controls were relaxed to intensify domestic competition.
Privatisation and globalisation as they were later referred to followed as complementary pillars of reform. Fundamentally it was about disinvestment and restructuring. Public enterprises were to be refashioned into “an engine of growth rather than an absorber of national savings,” through equity dilution, greater managerial autonomy and clearer accountability. To cushion the social impact of restructuring, Singh announced “a National Renewal Fund, with a substantial corpus,” ensuring that “the cost of technical change and modernisation… does not devolve on the workers.”Foreign investment, long viewed with suspicion, was recast as essential to recovery and competitiveness. India would “welcome, rather than fear, foreign investment,” permitting up to 51 per cent foreign equity in priority industries. The reforms, Singh concluded, were no longer a matter of choice: “no power on earth can stop an idea whose time has come”.
The infrastructure financier: P. Chidambaram (1996-97) — Creating long-term capital
P. Chidambaram’s 1996-97 budget, presented on July 22, 1996, addressed a fundamental structural problem: India’s financial system was unable to provide long-term finance for infrastructure projects.“Infrastructure needs long-term finance, typically 15-20 year financial instrument” Chidambaram stated.
The IDFC was designed as “a direct lender, as a refinancing institution and as a provider of financial guarantees” to infrastructure projects. This created institutional capacity for long-term infrastructure financing that had not previously existed in India’s financial architecture.The budget also strengthened highway development. “I have decided to provide a sum of Rs 200 crore to strengthen the capital base of the National Highway Authority of India.”On disinvestment, Chidambaram announced the establishment of a Disinvestment Commission. “Any decision to disinvest will be taken and implemented in a transparent manner. Revenues generated from such disinvestment will be utilised for allocations for education and health and for creating a fund to strengthen public sector enterprises.”
The dream budget: P. Chidambaram (1997-98) — Tax moderation and technology
P. Chidambaram’s 1997–98 Union Budget, presented on February 28, 1997, came to be known as the “dream budget” for its sweeping tax reforms and its explicit recognition of the information technology revolution. Chidambaram framed his proposals around the logic of the Laffer Curve, arguing that an optimal tax rate exists at which revenue is maximised, and that pushing rates beyond this point reduces collections by discouraging work and investment. On personal income tax, he made a clear break with past practice. “If we look at comparative income-tax slabs in other developing Asian countries, it will be evident that tax rates in India are still high and constitute an important reason for tax evasion,” he said.
“I have, therefore, decided to lower the rates of personal income-tax across-the-board in a significant manner. The current rates of 15, 30 and 40 per cent are being replaced by the new rates of 10, 20 and 30 per cent.” Chidambaram announced.On capital markets, Chidambaram introduced five structural reforms to the Companies Act. “Over 20 million Indians have invested their savings in the capital market. The establishment of the first Depository was an important step taken to bring the Indian capital market upto world standards and to protect the interests of the investors,” he said.The reforms included introducing the principle of buy-back of shares by companies subject to certain conditions; merging provisions of Sections 370 and 372 of the Companies Act with an overall ceiling of 60 per cent for inter-corporate investment and loans; providing for nomination facilities for holders of securities; requiring companies raising funds from the capital market to give an annual statement disclosing the end-use of such funds; and giving one-time permission to stockbrokers to corporatise their business without attracting tax on capital gains.The budget also announced comprehensive legislative reform. “I had set up an expert group to draft a new Companies Bill and another expert committee to prepare a new Direct Taxes Bill.” Chidambaram said. Perhaps most significantly for India’s future trajectory, Chidambaram explicitly recognized information technology as a transformative force. “Information Technology has radically altered conventional wisdom on growth strategies. I propose several measures to encourage this industry and to reduce costs,” he stated.
The disinvestment architect: Yashwant Sinha (1999-2000) — Reform through competition
When Yashwant Sinha presented the 1999-2000 budget on February 27, 1999, he signaled a fundamental shift in how the state would manage public sector enterprises. For the first time after Independence, with the enthusiastic support of all political parties in Parliament, it had been possible to discard the long standing tradition of presenting the budget at 5 PM—a break with colonial practice that symbolized the broader reforms to come.“Government’s strategy towards public sector enterprises will continue to encompass a judicious mix of strengthening strategic units, privatising non-strategic ones through gradual disinvestment or strategic sale and devising viable rehabilitation strategies for weak units,” FM Yashwant Sinha said. The disinvestment programme drew primarily upon the recommendations of the Disinvestment Commission, which had submitted eight reports containing recommendations for 43 public sector enterprises. “In 1999-2000, I propose to raise Rs.10,000 crore through the disinvestment programme. This will help the Government to fund the requirements of social and infrastructure sectors” he announced.The budget also addressed a fundamental governance challenge. “The Monopolies and Restrictive Trade Practices Act has become obsolete in certain areas in the light of international economic developments relating to competition laws.”
This recommendation led to the Competition Act of 2002 and the establishment of the Competition Commission of India.On expenditure management, Sinha announced two institutional innovations. “We will constitute an Expenditure Reforms Commission headed by an eminent and experienced person,” he stated. He also proposed to initiate a system of zero base budgeting in preparation for the next budget.
The fiscal disciplinarian: Jaswant Singh (2003-04) — Binding future governments
When Jaswant Singh presented the 2003-04 budget on February 28, 2003, India had recovered from the 1991 crisis but fiscal discipline remained elusive. FM Jaswant Singh’s diagnosis was clear: “Interest payments in 2002-03 are estimated at Rs 1,15,663 crore, equivalent to 48.8 per cent of the Government’s revenue receipts.”The solution was to bind future governments through legislation. The Fiscal Responsibility and Budget Management Act, passed in August 2003, set legally enforceable targets to reduce fiscal deficit to 3 per cent of GDP, end automatic monetization of the deficit by the Reserve Bank of India, and cap annual government guarantees at 0.5 per cent of GDP.The Act also mandated transparency. Every budget would now include a Medium Term Fiscal Policy Statement, a Fiscal Policy Strategy Statement, and a Macroeconomic Framework Statement. The government would have to publicly explain deviations from targets.“The Government has nurtured macroeconomic stability—held inflation low, and maintained a strong balance of payments position while promoting growth,” Singh stated.
The one-page tax return was introduced. “I propose to introduce a one-page only return form for individual tax payers, having income from salary, house property and interest, etc. This has already been devised, and will come into operation from April 1 onwards.” he said. Tax clearance certificates were abolished. “Henceforth, only expatriates who come to India in connection with business, profession or employment, would have to furnish a guarantee from their employer, etc. in respect of the tax payable before they leave India. An Indian citizen, before leaving India, will only have to give his/her permanent account number.”On search and seizure operations, new protections applied. “Stocks found during the course of a search and seizure operation will not be seized under any circumstances. Second, no confession shall be obtained during such search and seizure operations. Third, no survey operation will be authorized by an officer below the rank of Joint Commissioner of Income Tax.”
The earmarker: P. Chidambaram (2004-05) — Making taxation visible
On July 8, 2004, P. Chidambaram returned as Finance Minister and introduced a budgetary innovation that would be replicated across multiple sectors: earmarked taxation.“I propose to levy an education cess of 2% on the aggregate of all Central government taxes,” Chidambaram stated.
The cess was not additional spending—education allocations continued from the general budget. Rather, it created visible linkage between taxation and social investment. Citizens paying income tax, corporations paying corporate tax, importers paying customs duty—all would see 2 per cent of their tax bill designated specifically for education.The innovation was transparency. Unlike general taxation where revenues disappeared into the Consolidated Fund, earmarked cesses made the social contract visible: you pay this specific amount, it funds that specific purpose.
The technology enabler: Pranab Mukherjee (2009-12) — Digital infrastructure for governance
The budgets presented by Pranab Mukherjee between 2009 and 2012 coincided with the rollout of digital identity infrastructure that would transform benefit delivery.In his 2009-10 budget, presented in the aftermath of the global financial crisis, Mukherjee stated: “The challenge before us is to revive the economy without compromising medium-term fiscal sustainability.”
Budget documents during this period referenced the Unique Identification Authority of India, established in January 2009 through executive order. The UIDAI was mandated to issue unique identification numbers—Aadhaar—to all residents.Subsequent Mukherjee budgets referred to pilot programs for Aadhaar-based beneficiary identification and direct benefit transfers. Though not fully implemented during his tenure, the budgetary provisions and pilot programs laid groundwork for the JAM trinity that would later enable direct benefit transfers at scale.
The tax unifier: Arun Jaitley (2017-18) — Federal cooperation through consensus
Arun Jaitley’s February 1, 2017 budget came months before the July 1, 2017 rollout of the Goods and Services Tax—India’s most complex tax reform since independence.“The GST Council has held nine meetings and taken decisions on the basis of consensus,” Jaitley stated.The GST replaced 17 central and state indirect taxes with a unified framework. But the institutional innovation was the GST Council itself—a constitutional body comprising the Union Finance Minister, Union Minister of State for Revenue, and Finance Ministers of all states.
The Council operated on consensus. Each state had one vote; the Centre had one-third of total votes. Decisions required three-fourths majority. This forced negotiation, compromise, and federal cooperation on tax rates, exemptions, thresholds, and compliance procedures.For the first time in Indian fiscal history, tax policy for a major revenue source was made not by the Union government alone, not by Parliament alone, but by a federal body requiring agreement between Centre and states.
Infrastructure planning & New Tax Regime: Nirmala Sitharaman (2020-21) –“Once in century”
The Union Budget for 2020-21 was presented by Finance Minister Nirmala Sitharaman on February 1, 2020. In her speech, Sitharaman referred to the National Infrastructure Pipeline, which identified infrastructure projects across sectors over a multi-year horizon.A Project Preparation Facility was announced to support the appraisal and design of infrastructure projects. The budget documents referred to the involvement of technical and professional expertise in project preparation. The formulation of a National Logistics Policy was also referred to, with the objective of clarifying roles across ministries and reducing duplication.“In continuation of the reform measures already taken so far, the tax proposals in this budget will introduce further reforms to stimulate growth, simplify tax structure, bring ease of compliance, and reduce litigations” she said.
The budget increased capital expenditure and outlined plans for asset monetisation through a structured pipeline. The National Monetisation Pipeline was referred to in the budget documents as a mechanism for leasing public assets.But the 2020-21 budget’s most consequential institutional reform was in personal income taxation. Sitharaman announced a fundamental restructuring of the tax regime itself.
Tax reforms: Nirmala Sitharaman (2025-26)
The Union Budget for 2025-26 was presented by Finance Minister Nirmala Sitharaman. The budget referred to Jan Vishwas Bill 2.0, which proposed the decriminalisation of specified provisions across multiple laws. The objective, as stated in the budget documents, was to reduce compliance burden and improve ease of doing business.Under the new tax regime, the Finance Minister said no income tax will be payable on incomes up to Rs 12 lakh, excluding income taxed at special rates, with the limit rising to Rs 12.75 lakh for salaried taxpayers after the standard deduction of Rs 75,000.
A high-level committee was announced to review non-financial sector regulations, licences, and permissions. The budget proposed the introduction of a new Income Tax Bill. “The new bill will be clear and direct in text so as to make it simple to understand for taxpayers and tax administration,” Sitharaman stated.Thresholds for tax deduction at source and tax collection at source were revised. The budget also announced revisions to thresholds for certain categories of taxpayers, including senior citizens and small enterprises.
An evolving path
Four decades separate Mukherjee’s performance-based grants from Sitharaman’s compliance rationalisation. Yet the trajectory is consistent: budgets have served as instruments of institutional adaptation, responding to the evolving challenges of the Indian state.India’s budgetary reforms have not followed a predetermined blueprint. They have emerged from negotiation between continuity and change—preserving the state’s redistributive role while dismantling mechanisms that stifled growth. What remains unresolved is whether these frameworks can keep pace with emerging challenges. Digital taxation, climate financing, and the fiscal implications of changing demography require a budget as an anchor of reform and evolution. The budget, once again, may need to serve as more than an accounting exercise.
