Every Budget has a personality. It could try to please all, punish a particular section, present a radical future vision, or disappoint everyone. The Budgets that stand out for their unique aspects get tags that describe them succinctly. Black Budget, Rollback Budget and Dream Budget are some of the Budgets that are remembered for their uniqueness.
Yes, it was grim enough to deserve this tag. Yashwantrao B. Chavan, the finance minister in the Indira Gandhi government, presented this Budget in 1973. The darkest part of his Budget was a deficit of Rs 550 crore. There was another reason it could have attracted the ‘black’ tag : it proposed to nationalise the coal mines. This was to allow uninterrupted supply of coal in line with the growing demand for coal in industries like power, cement and steel. However, the Budget hit coal production in the long run and India had to depend on coal imports.
It was the infamous Budget 2002-03 by Yashwant Sinha, finance minister in then NDA government, that came to be called the Rollback Budget due to Sinha buckling under pressure of the opposition parties and within his own to roll back several proposals. Sinha had raised PDS prices of LPG, kerosene and sugar, cut interest rates for small savings, reduced subsidy on fertilisers and income-tax rebate under Section 88. Due to populist pressures, Sinha had to roll back several of his proposals. However, he was able to rescue some key structural changes introduced in the Budget such as taxing dividend incomes in the hands of investors and linking small saving rates to market-determined rates of interest.
In 1997, P Chidamabram — then a member of Tamil Manila Congress and the finance minister in the HD Deve Gowda government — presented what came to be known as the Dream Budget. Chidambaram heavily slashed income and corporate taxes with an eye on increasing compliance. The economic theory of Laffer Curve sets up a relationship between rates of taxation and the government revenue. A general interpretation means raising taxes cannot be a surefire way to raise revenue. Chidambaram’s cut in corporate taxes was in the hope that it would increase tax compliance as high rates had proved to be discouraging. Chidambaram abolished the surcharges on corporate tax and reduced the tax rate to 35 per cent. He also cut the peak rate of customs duty from 50 per cent to 40 per cent.
The Deve Gowda government fell a month later. Though the immediate impact of Chidambaram’s revolutionary move could not be gauged as the Asian crisis besieged the economies in the region, his tax cuts did have a positive impact on the economy in the long run. In fact, his 1997 Budget was seen in continuation of the reforms and liberalisation ushered in by Manmohan Singh during the PV Narsimha Rao government in 1991
Source : PTI