Union Budgets in 60's and 70's witnessed major events like the Black Budget and Demonetization Act.
(Note: This podcast was first published in January 2018 and has been repurposed for Moneycontrol listeners.)
There was a major structural change in India's annual accounting exercise in 1959-60. For the first time, budget estimates were clubbed under 2 broad heads: Plan and Non Plan expenditure.
The Expenditure Tax that was applicable on all expenditure above Rs.36,000 per annum no matter from which source the money for expenditure came. It was presented in the 1964 Budget, but abolished 2 years later.
India’s first-ever Voluntary Disclosure Scheme of unaccounted wealth, offering people the window to deposit undisclosed cash with the RBI on which a tax was deducted, was proposed in 1965-66.
The price of imported cars saw a sharp jump after this budget, since it was seen as a `status symbol’. The import duty was raised from 60 to 100%, bringing it at par with other frivolous luxury items.
A tax was levied on foreign travel at the rate of 20 per cent on all tickets purchased in rupees; tickets paid for in foreign exchange was exempt. This was done to clamp down on cash deals, and was introduced in 1971-72.
The so-called Black Budget of 1973-74 provided Rs 56 crore for the nationalisation of the general insurance companies, Indian Copper Corp and 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. The Black Budget was presented by Y.B. Chavan, who was also the first Chief Minister of Maharashtra. It was so called because the deficit at the time was close to Rs 550 crore.The 1978-79 budget was presented barely a month after a defining event in Indian economy, a decision that was repeated 30 years later. The event is question is demonetisation. The budget speech argued in favour of this controversial decision. On January 16, 1978, the Janata Party government decided to scrap Rs 1,000, Rs 5,000 and Rs 10,000 notes, a move aimed at controlling illegal transactions.