Budget 2025: ‘black budget’ by Indira Gandhi led govt in 1973-74? know story behind most infamous budget of India

While some budgets, like those of 1991 and 1997, are celebrated for their reforms, others, like the "Black Budget" of 1973-74, show tales of economic adversity.

India’s financial history is dotted with pivotal budgets that have shaped the nation’s economic trajectory. From the introduction of Liberalisation, Privatisation, and Globalisation (LPG) reforms in 1991 by the late Dr. Manmohan Singh to the tax reforms under P. Chidambaram in 1997, each budget brought its unique impact. However, one of the most notable budgets in Indian history is the 1973-74 budget, infamously known as the “Black Budget.” Here’s why.

Landmark Budgets In India’s Economic History

India has witnessed several transformative budget presentations over the decades. The 1991 budget, introduced by then-Finance Minister Dr. Manmohan Singh, marked a new era for India’s economy by dismantling the License Raj and opening the economy to global markets. These reforms laid the foundation for India’s economic liberalization.

Similarly, the 1997 budget, presented by P. Chidambaram, was hailed as a “Dream Budget.” It brought significant relief to taxpayers, reduced personal and corporate taxes, and introduced bold economic reforms that propelled the country’s growth.

What Was ‘Black Budget’ Of 1973-74?

The 1973-74 budget, presented by Yashwantrao B. Chavan during Indira Gandhi’s tenure as Prime Minister, is remembered for all the wrong reasons. It earned the nickname “Black Budget” due to an unprecedented fiscal deficit of Rs 550 crore, a colossal figure at the time.

Understanding Fiscal Deficit

A fiscal deficit occurs when a government’s total expenditure exceeds its total income. It is a critical economic indicator, and a higher fiscal deficit typically signals financial strain for a country.

Why Was 1973-74 Budget Termed ‘Black’?

The economic turmoil during the period was primarily caused by two major events:

Indo-Pak War of 1971: The war had placed an enormous burden on India’s resources, with defense expenditures skyrocketing to Rs 1,600 crore.

1972 Drought: One of the worst droughts in decades devastated India’s agricultural sector, leading to severe food shortages and widespread rural distress.

The dual challenges of post-war expenses and rehabilitation, combined with the agricultural crisis, left the Indian economy in a precarious state. The massive fiscal deficit reflected the nation’s struggle to meet these extraordinary challenges.

Legacy Of ‘Black Budget’

Although the 1973-74 budget symbolized a period of economic hardship, it underscored the resilience of the Indian economy in overcoming crises. The lessons from this period paved the way for stronger fiscal policies in the years that followed.

India’s budget history reminds us of the challenges and triumphs that have shaped the nation’s economy.