The ones that stand out for their uniqueness draw fitting tags unto themselves. That’s how one budget came to be called the Black Budget, another the Rollback Budget. And not to forget the Dream Budget — the one that had heavily slashed taxes.
Here is a look at a few of them and the reasons why they got those curious labels.
The Rollback Budget
The Budget presented by Yashwant Sinha in 2002-03 has a special, unenviable place in history. It came to be known as the ‘rollback budget’ after Sinha, the Finance Minister in the then NDA government, had to subsequently roll back many of his proposals.
In his budget, Sinha had reduced subsidy on fertilisers and income-tax rebate under Section 88, raised PDS prices of LPG, kerosene and sugar, and cut interest rates for small savings.
Populist pressure soon made things tough for Sinha. He eventually had to give in to the pressure piled up by opposition parties and even by some from his own party.
Sinha, however, was able to save a few of his key proposals such as linking small saving rates to market-determined rates of interest, and taxing dividend incomes in the hands of investors. But the name — the rollback budget — stuck.
The Dream Budget
The 1997 general budget that cut income and corporate taxes heavily came to be known as the ‘Dream Budget’. In that budget, P Chidambaram — then a member of Tamil Manila Congress and the finance minister in the HD Deve Gowda government — brought in steep reduction in tax rates with a view to increasing compliance.
Chidambaram did away with the surcharges on corporate tax and slashed the tax rate to 35 per cent. He also cut the peak customs duty rate to 40 per cent from 50 per cent.
The economic theory of Laffer Curve shows the relationship between rates of taxation and the government revenue. According to this theory, raising taxes cannot be a surefire way to raise revenues. Chidambaram’s corporate tax cuts were based on the hope that it would increase tax compliance as high rates had proved to be a big dampener.
A month after the budget the Deve Gowda government fell. It is difficult to gauge the immediate impact of Chidambaram’s potentially far-reaching steps because a little while after the Dream Budget the debilitating Asian financial crisis had set in, roiling all economies in the region.
But in the long run, the tax cuts did have a positive impact on the Indian economy. In fact, Chidambaram’s budget was seen as a continuation of the reforms and liberalisation ushered in by Manmohan Singh during the PV Narsimha Rao government in 1991.
The budget presented in 1973 by Yashwantrao B. Chavan, the finance minister in the Indira Gandhi government, was grim enough to deserve this bleak labelling.
The bleakest thing about that Budget was a deficit of Rs 550 crore. There was one more factor that may’ve had a hand in getting it the ‘black’ tag: it contained the proposal of nationalising India’s coal mines.
This proposal was aimed at facilitating uninterrupted supply of coal to cater to the quickly rising demand from industries like steel, cement and power.
Contrary to expectations, the Budget only affected coal production in the long run and India had to depend on coal imports.