Palaniappan Chidambaram has the distinction of presenting six Budgets. He became the finance minister for the second time in May 2004 in the United Progressive Alliance government. His first stint as the finance minister was from 1996 to 1998. Chidambaran is acclaimed to have carried forward the economic reforms started in 1991 by Manmohan Singh.
He is known for his ‘dream Budget’ in 1996-97, in which he curbed government expenditure and launched an ambitious tax reforms program to address a huge fiscal deficit.He started his career as a lawyer in the the Madras high court.He made tax rates moderate for individuals as well as companies. Allowed companies to adjust MAT paid in earlier years against tax liability in subsequent years. Launched the Voluntary Disclosure of Income Scheme or VDIS, to bring out black money. Phased out ad hoc treasury bills used for financing the budget deficit.
India had a peak income tax rate in the late 1960s and early 1970s of 97.5 per cent. The moderation in rates improved overall compliance as those who used to find rates prohibitive earlier began to pay up instead of hiding their incomes. Since 1997-98, personal income tax collections have gone up from Rs 18,700 crore to Rs 100,100 crore during April 2010- January 2011. The VDIS garnered about Rs 10,000 crore. Higher disposable income in the hands of taxpayers helped generate demand. The incremental tax revenues were leveraged into developmental public expenditure on social welfare and the infrastructure sector.