Why The Union Budget Of 1973 Is Called India’s ‘Black Budget’

As the Union Budget 2026–27 is set to be presented on Sunday, February 1, 2026, by Finance Minister Nirmala Sitharaman, it marks her ninth Budget speech and is being closely watched across the country. While attention remains firmly on what lies ahead, India’s budget history has seen some defining moments.

One of the most talked-about remains the Union Budget of 1973–74, often remembered as India’s “Black Budget”, a term that reflects the intense economic strain the country faced at the time.

India’s Black Budget

The 1973 budget was presented by then Finance Minister Yashwantrao B. Chavan during Prime Minister Indira Gandhi’s tenure. What made it stand out was the size of the fiscal deficit, which stood at around Rs 550 crore. For that period,

the number was shockingly high. It clearly showed that government spending had gone far beyond its income, signalling deep financial trouble.

A fiscal deficit occurs when a government’s spending exceeds its income, representing the gap between its total income and total expenditure.

Factors that led to Black Budget

Several factors came together to push the economy into this situation. One of the biggest reasons was the impact of the 1971 war with Pakistan and the creation of Bangladesh. Defence spending rose sharply, and the cost of supporting and resettling more than one crore refugees added further pressure on government finances.

At the same time, India was dealing with a severe drought in 1972. Agricultural output suffered badly, leading to food shortages in many parts of the country. Rural distress increased, while cities faced power cuts and rising unemployment. The government was forced to spend heavily on relief measures just to keep basic systems running.

Global developments added to the crisis. In 1973, the international oil shock caused fuel prices to surge worldwide. As India depended heavily on oil imports, its import bill jumped suddenly. Inflation rose, foreign exchange reserves came under stress, and the balance of payments situation worsened.

What the Union Budget 1973-74 looked like

Finance Minister Yashwantrao B. Chavan made it clear that the situation demanded tough and uncomfortable decisions, he called for “bold action to secure our future” which was reflected in how the government chose to spend its limited resources. The budget set aside Rs 56 crore to bring sectors like coal mining and general insurance under state control, a move aimed at tighter regulation and long-term stability. A large amount was also reserved for immediate relief.

Around Rs 220 crore was allocated to tackle the drought situation, while Rs 160 crore was kept aside to import nearly two million tonnes of food grains. These steps showed how strained the economy had become.

The 1973 budget earned the label “Black Budget” not because of secrecy, but because it laid bare a grim economic reality. It remains a reminder of how several global external shocks and domestic challenges can combine to test a nation’s financial stability.