97% income tax!
The turning point in India's economic policy came in 1974.
Over the previous five years, Indira Gandhi had nationalised 14 big banks, the general insurance companies, coking coal mines and then non-coking coal mines.
The monopolies law had been passed, and shackles put on the "big" Indian business houses.
Then the Foreign Exchange Regulations Act (FERA) was amended to put shackles on foreign companies operating in the country.
The result? Bajaj Auto, being part of a "monopoly house", was not allowed to expand production, though it had a waiting list for its scooters that stretched for nine long years. If you wanted a groom for your daughter, you sometimes had to offer the chap the scarce commodity called a Bajaj scooter as inducement.
And under FERA, global companies with subsidiaries in India had to offer their shares to the public at a fraction of their real value - the price being determined by the Controller of Capital Issues.
Salaries for company bosses were capped, and remained unchanged despite rampant inflation. And when Indira Gandhi took charge as finance minister, after sacking Morarji Desai, she used the 1970 Budget to jack up the maximum income tax rate to more than 97 per cent.
If you added the effect of the wealth tax, anyone with some wealth found his combined income and wealth tax burden totalling more than 100 per cent of his income on the margin.
Women who had lost their husbands sometimes had to sell their homes in order to pay the estate duty.
Text: TN Ninan, Business Standard
Image courtesy: Associated Press