Did ancient India have annual Union budget concept?

Did ancient India have such annual budget exercise? Although documented Indian history lacks specific details about the administration of dynasties in different regions, the Arthashastra provides a comprehensive account of the financial budget process. It's important to note that there is no certainty that the Maurya kingdom actually implemented the processes outlined by Kautilya in his master treatise, which intricately outlines a framework for a kingdom's financial management and planning.

Annually, budgets and accounts were to be prepared based on a 354-day year. Entries were correlated with the king's regnal year, known as 'rajavarsham,' aligned with the work year concluding on the full moon day of the Ashadha month (June/July), coinciding with the present-day Guru Poornima. Specific date entries were recorded according to the year, month, fortnight, and day.

The 'Samaharta,' akin to today's Finance Minister, held the responsibility for drafting the budget and managing accounts. This role involved determining the revenue to be collected across various income sources, organizing income under aayamukhas, and striving to enhance revenue while reducing expenditure. Additionally, addressing any imbalance in expenditure exceeding income was a key directive.

Expanding on this, the revenue items were termed 'aayasharira' or the body of income, categorized into seven heads: city, country, mines, irrigation works, forests, cattle herds, and trade routes. City revenues included customs duties, fines, income from the weights and measures department, passport issuance, income from liquor, yarn, ghee, goldsmiths, services of prostitutes, gambling, contributions from artists, and income from temples, among others.

Revenue from the country's interiors originated from agriculture, while mines contributed income through salt, minerals, and precious stones. The irrigation-works category gathered revenue from sales of flowers, fruits, vegetables, etc. Additionally, income from animal husbandry, equivalent to present-day practices, was collected through forests and cattle herds.

Given the crucial role of trade in the Mauryan empire, trade routes constituted a distinct and significant category. Revenue from these sources was further classified into seven 'aayamukhas' or channels, encompassing price, share, tax, duty, levy, surcharge, or penalty. On the expenditure side, termed 'vyayasharira,' there were fifteen categories. These included expenditures for the worship of gods and charity, with the most significant allocations for the armed forces, the armoury, and the palace. Other notable expenses covered stores, factories, labourers, and the maintenance of animal wealth. The majority of expenditures were on state accounts, with only a few contributing to the king's privy purse (salaries for all royals, excluding the king, were fixed at specific levels).

Expenditure categories lack specifics on state enterprise spending, like mining, likely because revenue represents net income after deducting expenses. This principle applies uniformly across all revenue items. Concepts such as revenue estimate, accrued revenue, outstanding revenue, income, expenditure, and balance were employed in accounting to portray an accurate snapshot of the kingdom's budgetary status at the year's end, extending into the next one.

The Arthashastra precisely outlines these concepts, making it intriguing to compare them with contemporary accounting standards. At the start of the year, a budget estimate for revenue was established, considering various economic activities and administrative units like villages, districts, and regions. The Samaharta or his office set these estimates, and it was imperative for the officers responsible for delivering this revenue to adhere strictly to them for the state stores.

Incomes were categorized as current, outstanding, and sourced from other avenues. Daily revenue fell under the 'current' category, while revenue from the previous year or transferred from another sphere of activity was considered 'outstanding.' Fines, compensation, property takeovers, treasure, and price increases constituted 'income from other sources.'

Expenditure was categorized into day-to-day, at fixed intervals, and unforeseen expenses, with the latter two classified separately. After calculating revenue and deducting expenditure, the remaining balance was received and carried forward. Notably, the majority of state revenue was in kind, managed by the complex state stores overseen by the 'Sannidhatri.'

Another crucial office in the budgetary context was the 'Akshapataladhyaksha' or the head of the records-cum-audit office, akin to the modern Comptroller and Auditor General. This office operated independently from the Samaharta, and its records were designed to scrutinize the accounts maintained by the Samaharta's office.

Reviewing the various sections in the annual financial statement of the Union budget reveals that receipts into the Consolidated Fund of India come from tax sources, encompassing income tax, corporation tax, and indirect taxes, as well as non-tax sources like fiscal services, interest, dividends, and profits. Expenditure is allocated to general services, social services, and economic services. General services cover the essential expenses to keep the state operational, such as the legislature, executive, judiciary, tax administration, and defence. Economic services include disbursements related to areas like animal husbandry, irrigation, mines and minerals, industries, rural development, and transport and communication. A brief examination reveals parallels between tax resources on the revenue side and comparable disbursement categories on the expenditure side.

An intriguing contrast between Kautilyan and modern budgeting lies in the absence of specific differentiation on capital and revenue accounts in the former. Although Kautilya acknowledges the differences in impact and implications, the Mauryan budget lacks explicit categorization. Unlike modern budgeting, which emphasizes significant developmental push and economic planning, the Mauryan budget did not prioritize these aspects.

The intricate accounting and auditing machinery was established to ensure the State consistently benefited from economic activity. Throughout history, rulers have consistently made "development" a central theme in their budget planning exercises, as the welfare of citizens remains a key indicator of social health.

Dr. Srinath Sridharan is a policy researcher & corporate advisor