Why was Indira Gandhi’s budget of 1973 called ‘Black Budget’? Know what happened at that time

Budget 2025: Union Finance Minister Nirmala Sitharaman will present the Union Budget for the financial year 2025-26 on 1 February 2025. This budget will be the first full budget of Modi Government 3.0, which has created huge expectations and curiosity across the country. Various sectors are putting their demands before the government. But do you know that in the history of India there was a budget which was called ‘Black Budget’? Let us know the story of that historic budget of 1973-74.

1973-74: Why was it called ‘Black Budget’?

The budget of 1973–74 holds an important place in the economic history of India. It was called the ‘Black Budget’ because it highlights the serious economic challenges of that era and the policy failures of the government.

Major economic crisis:

1. Indo-Pak war of 1971:
   This war caused huge pressure on the country’s economy. The government treasury was empty due to the war.
2. Drought and Natural Disasters:
   During this period the country faced drought and other natural disasters, leading to a sharp decline in agricultural production.
3. Food crisis:
   These problems led to a decline in food grain production, leading to a rapid increase in the budget deficit.

What happened in ‘Black Budget’?

Fiscal deficit of Rs 550 crore:

The then Finance Minister Yashwantrao Balasaheb Chavan, while presenting the budget, disclosed a fiscal deficit of Rs 550 crore. This was a big economic challenge for that time.

Announcement of nationalization:

Some big decisions were taken in this budget, such as:

1. Nationalization of Coal Mines:
   A provision of Rs 56 crore was made. The government argued that the move would solve the energy crisis.
2. Nationalization of Insurance Companies:
   To organize and strengthen the insurance sector, it was brought under government control.
3. Nationalization of Indian Copper Corporation:
   This step was taken towards maximum utilization of mineral resources and self-reliance.

effect of black budget

After this budget:

• Fiscal discipline: The government began taking strict measures to cut expenses and increase revenues.
• Changes in Economic Policies: Nationalization decisions affected the Indian economy for a long time.
• Inflation and economic pressure: This budget was considered to deepen economic problems instead of solving them.

Budget 2025: What are the prospects?

Many speculations are being made regarding the budget of 2025:

1. Relief for taxpayers:
   It is expected that exemption in income tax can be given, which will provide relief to the middle class.
2. Industry and Employment:
   The government can make special provisions to promote industrial production and employment.
3. Focus on growth:
   India’s GDP growth rate in the current financial year (2023-24) is estimated to be 7.3%. The government can emphasize on infrastructure and Digital India to maintain this momentum.

Can a situation like ‘Black Budget’ happen again?

Although Budget 2025 will be presented in a different economic environment, the government will have to keep an eye on its fiscal position and budget deficit. The challenge of every budget is to strike a balance between big expenses and shortfall in revenues.