Ahead of the fortieth anniversary of the Emergency, there has been a predictable rash of commentary on that dark interlude in India's democratic experience. It is predictable not just in terms of the people who have written or spoken out, but also the manner in which we think about that period. The Emergency continues to be widely seen as a memento mori - an episode that should remind us of the fragility of our democratic institutions, the weakness of our commitment to preserving liberties, and the dangers of slipping into an authoritarian mode of governance. Think only of L.K. Advani's recent, circumlocutory remarks.
The tendency to look back at the Emergency in these terms is entirely understandable. After all, this period witnessed not just the suspension of liberties and subversion of institutions, but also the deployment of state power against the most defenceless sections of society. Yet, such an approach also detracts from a closer historical assessment of the causes and consequences of the Emergency.
Any such account must begin by acknowledging that while the Emergency had clear start and end dates, it cannot be understood in isolation from longer trends and processes. Nor can we grasp its import for our recent history if we see it only as a high political drama.
Consider the economic dimensions of the Emergency. Few now recall the economic backdrop to the story. In the run up to the Emergency, the Indian economy was buckling under a set of cumulative strains caused by the Bangladesh refugee crisis and war with Pakistan, the ensuing termination of aid by the United States, the recurrent failure of monsoons, and the international oil crisis following the Arab-Israeli war of 1973. The oil shock made a deep dent on the Indian economy. There was a rapid slide in balance of payments and rampant inflation from mid-1973 to September 1974. At its peak during this period, inflation touched 33 percent. This spiralling inflation played a significant role in triggering popular protests against the government - protests that widened into the JP movement and subsequently led to the imposition of the Emergency.
This period also witnessed the beginnings of important changes in Indira Gandhi's economic policy. Following the Congress party's poor performance in the elections of 1967, Mrs. Gandhi had sought to move further to the Left in her politics. This was aimed at cementing both her personal appeal over that of the party's bosses and at securing the parliamentary support of the Left parties once she moved to split the Congress. These political considerations had led to her to adopt more "radical" economic policies such as nationalizing banks, insurance companies and the coal industry, passing the Monopolies and Restrictive Trade Practices Act to closely regulate businesses, and the Foreign Exchange Regulation Act to comprehensively control foreign investment in India. This "socialist" phase in economic policy continued until 1973, when the mounting economic crisis forced Mrs. Gandhi to adopt a more pragmatic stance.
From mid-1973, the government began pruning its expenditure and tightening monetary policy. In July 1974, Mrs. Gandhi introduced a rather tough package of anti-inflationary policies - fiscal, monetary and income-policy measures - by means of a supplementary budget and ordinances. Many of her senior colleagues and Left-leaning advisors warned her that these measures would be politically costly. Yet she chose to back her team of liberal economic advisors and officials, including a certain Dr. Manmohan Singh. By the end of 1974, inflation was reined in.
To stabilize the current account of balance of payments, Mrs. Gandhi also sought assistance from the IMF. Perhaps the clearest indication of the end of "socialist" phase was the brutal crackdown on the Railway strike of May 1974. In the road leading to the Emergency, then, Mrs. Gandhi was turning to the Right in economics as well as politics. She now lent her ear to advisors like BK Nehru, who urged her to abandon "garibi hatao" for "utpadhan barhao" or increased production, and called for more business-friendly policies.
After the Emergency was imposed, Mrs. Gandhi announced a Twenty Point Programme of economic and social change. The components of this programme relating to industry slotted in smoothly with the ideas suggested by the likes of BK Nehru. Facilitating and accelerating private sector activity was a key part of the government's economic agenda during the Emergency. Big businesses were naturally pleased with this turn in policy. Only weeks before the Emergency was revoked, JRD Tata lauded the "refreshingly pragmatic and result-oriented approach" that had led to "conditions of discipline, productivity, industrial peace, price stability and widespread involvement necessary to achieve rapid economic growth."
It is also not surprising that Big Business welcomed Indira Gandhi's return to office in 1980. Indeed, the Janata government's mismanagement of the economy tends to be forgotten now. The pro-business tilt inaugurated in the mid-1970s was continued and intensified during Mrs. Gandhi's last term in office. This was symbolized by an unprecedented dinner held in her honour in a well-known Delhi hotel in 1980. Her host was India's largest producer of polyester: Dhirubhai Ambani.
So, the Emergency was an important inflection point in the long transformation of the Indian economy and a harbinger of a new pattern of relations between the state and big business. Whether or not we approve of these developments, the fact remains that the Indian economy did move to a higher growth trajectory during these years. Seen from this vantage-point, it seems clear that the Emergency was a more complex period than that portrayed by the conventional wisdom.
Four decades on, it still awaits the attention of historians.
(Srinath Raghavan is Senior Fellow at Centre for Policy Research, New Delhi)
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