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A Budget disaster, six centuries ago

clip_image002[7]Muhammad Bin Tughlaq, Emperor of Hindostan (India) from February 1325 to March 1351, was a visionary, learned and wise emperor. But he was also lunatic, crazy and cruel. He took some decisions, which he thought are for the betterment for the country, but ended up messing everything and was given a nickname by his own countrymen: “Pagla Sultan” (Crazy Emperor). His decisions were ambitious and attempted with best intentions, but exhibited lack of proper planning and inadequacy of correct information. He was a visionary, who extended his empire to a limit, to which no other Sultan of Delhi did in entire history of Sultanate period. Muhammad Bin Tughlaq was a highly qualified person. He was one of those few Islamic/Turkik rulers, who could understand and speak Sanskrit along with Persian, Turkish and Arabic. His interest in mathematics, astronomy, philosophy and physical sciences gave him the tag of ‘Scholar’. With the knowledge of medicine he had, he was half a doctor himself. Such a learned person he was, that he thought of far future but failed to handle the present. Policies and Innovations excited him and he was always busy in planning something new for domestic and foreign front. He used his knowledge of languages and philosophy to unite India and to establish embassies in various other countries.

He started the practice of keeping record of income and expenses of all princes. Governors were told to submit periodic account statements of their jurisdiction. It was the earliest form of centrally controlled accounting system that would involve everyone, from the king to peasant. It was considered a useless step at that time but today we know how important national level central accounting system and national budget has become in our lives.

Since Anangpal Tomar stepped in Delhi in 736 AD, around 38 rulers from 6 dynasties ruled from Delhi’s throne. Many of these established cities, forts and villages. To name a few, Tomars built Lal Kot, Mahipal Tuar (Tomar) built Mahipalpur (near airport), Prithvi Raj Chauhan built Qila Rai Pithora, Khilji built Siri and Ghiasuddin Tughlaq built the majestic fort of Tughlaqabad. But Muhammad Bin Tughlaq was a visionary and he realized that the growing population of his capital will require bigger places to live. He did the best part by combining the previously built cities – Rai Pithora, Siri & Tughlaqabad and created ‘Jahanpanah’ (Abode of the world).

Muhammad Bin Tughlaq sent his army to attack Himalayan provinces like Kangra and even the Chinese cities. There was only one flaw in his otherwise flawless military plan: he forgot to account the power of nature and weather of the Himalayas. His bravest men were sacrificed to the cold weather, which they were never prepared for. His military expeditions were affecting the national treasure badly. Tughlaq was then forced to increase taxes. He guessed that the most productive land in his empire is the portion between Ganges and Yamuna (area locally called Doab). He increased the tax to as many as 20 folds in this area, but failed to account that the year he increased the tax was the year of famine. Poor and frustrated people left their homes and become robbers and dacoits. But govt. officials continued to collect tax, which resulted in a major revolt.

Very late, Tughlaq realized his mistake and established a ministry for Agriculture. He instructed his new minister to find more fertile land and lease it out to poor farmers, who will cultivate it for court’s benefit. This policy was even bigger failure and the department was shut within 2-3 years because of high level of corruption amongst the people who were implementing it. They purchased very poor land for cultivation and assigned it to people, who had no interest in cultivating govt. land.

One of Tughlaq’s worst decisions was to shift the capital from Delhi to Daulatabad. It is a fort city in Maharashtra, which was earlier known as Deogiri. Circa 1327, Tughlaq forced entire population of Delhi to shift to Daulatabaad. He thought that to unite India, he must be centrally placed. He also wanted to move away from Delhi because it was on direct radar of invaders from Khorasan. The third reason to shift was that he realized that a country as big as Hindostan, needs atleast two capitals. But his men failed to analyze the situation and land properly. The land of Daulatabad and the journey to that land was one of the biggest disasters of the Sultanate period. The city was abandoned within 2 years due to lack of water and adequate cultivable land. Delhi’s population lost everything they had and businesses were shattered. Most of them died during this transition and almost entire cattle fleet of Delhi was finished.

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With such disastrous decisions, Muhammad Bin Tughlaq decided to improve his financial status. He needed more money but in order to mint Gold Coins, he needed lot of money, which was already depleting. So he decided to mint coins from Copper and value them equal to Gold. Circa 1329, he released his copper currency from mints of Delhi and Daulatabad. This policy was based on Chinese currency system, where brass and copper coins were used and equivalent gold/silver was kept in treasury. Tughlaq’s two scalable standards were issued, one in North and other in South. In order to impress his citizens he engraved on his Copper coins “He who obeys the Sultan obeys the compassionate”. For a change, citizens were very happy with this move, because this currency was so easy to forge. Illegal mints were established across the city of Delhi and people started minting copper coins and using them as Gold Coins. Within 2-3 years, the treasury was in its worst state ever. Tughlaq ordered immediate recovery of copper coins and in order to ensure that innocent people do not suffer, he decided to reimburse the copper coins with original gold coins. The illegal mints minted their last lot of illegal currency and got it replaced with Gold. The currency mafia in Delhi became millionaire overnight and the royal court was no longer able to support Tughlaq’s ambitious plans. For years, heaps of copper was laying everywhere in courts of Tughlaq.

clip_image010[4]Tughlaq’s gold and silver coins were minted in cities of Delhi, Daulatabad, Lakhnauti (now Lucknow), Salgaun, Sultanpur (now Warangal), Tirhut and couple of other cities. He also changed the weight of Gold Dinar from 172 to 202 grains. His silver coins (Adlis) were not very popular amongst people and lasted only 7 years of circulation. He is known to issue more than 30 varieties of calligraphy rich bullion coins.

Budget has been the most important function of any government. Various policies of government rely on budget but when government plans their budget without accounting all factors, disasters like “Tughlaqi Farmans” happen.

Note: The pictures were taken from Google. My credits to people who have clicked them. Unfortunately, I do not know who did this exercise with the camera. Please let me know if you own the pic, so I can give you due credit.

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