The budget papers certainly were not black. The color black was the media’s symbolic reference to the budget speech set during a time-period of immense economic turmoil. The term black-budget remains an inglorious reference to the hardships of 1973.
Yashwantrao Chavan was Maharashtra's first Chief Minister and over the years had held several key profiles in the Union such as Defense and Finance Ministry.
The immediate observation made from Chavan's speech was a massive deficit of Rs 550 crores. What complicated the situation was the situation of drought coupled with the war in Bangladesh or East Pakistan.
Chavan’s introduction of the budget speech summarized the situation. “Once again there was a failure of the monsoon in the summer of 1972 which created severe drought and scarcity conditions in several parts of the country. This has led to extensive loss of crops, shortage of fodder, and paucity of drinking water, creating conditions of grave hardship and suffering in parts of the country.”
This was the second year in succession that procurement of grain was affected. It took a huge toll on commercial crops such as oil seeds and raw jute. Production imbalance resulted into wild price-swings. Chavan mentioned in his speech, “The wholesale prices index during the period April 1972 to the end of January 1973 registered an increase of 9.1 per cent, as compared to an increase of 3.7 per cent during the corresponding period of 1971-72. The rise in the prices of food articles was the crucial factor contributing to the increase in the index of wholesale prices.”
Although the exports looked favorable posting a 23% growth in the first eight months of 1972-73, Chavan looked at another major challenge- loans of Rs 421 crores offered to state governments to clear their overdrafts.
Bridging the shortfall of food-grains, heavy spending on drought relief and emergency agricultural production programs took a toll on the expenditures. The budget expenditure on Defense this year was Rs 1600 crores.
“Other commitments contributing to expenditure higher than estimated in the budget proposals this year are - additional food subsidy to the extent of about Rs.17 crores, payments on account of the take-over of general insurance, coking and non-coking coal mines and the indian Copper Corporation to the extent of Rs.56 crores, and, Rs.18 crores for rehabilitation assistance to about 8 lakhs people on the Western front affected by December 1971 war with Pakistan,” said Chavan.
In terms of receipts of income, the major receipts and corporation taxes were estimated at Rs.83 crores more than the Budget Estimates. Customs revenue was pegged to exceed by Rs 90 crores. However, Union-Excise-duties were expected to show a decline of Rs.37 crores compared to Budget Estimates owing to drought impact and power shortage.