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Did Indira Gandhi impose Emergency to escape economic crisis?

Indira Gandhi was at the peak of her popularity on December 16, 1971 when Pakistan Army surrendered and Bangladesh was liberated. She was soon compared with Goddess Durga for her decisive leadership. But in just two years’ time, Indira Gandhi had fallen out of public favour.

A bunch of university students signaled the declining trend with their Navnirman Movement on December 20, 1973 in Gujarat. Their protest began with demand for rollout of hike in college and canteen charges but it soon targeted Indira Gandhi with her long-time bête noire Morarji Desai providing leadership.

When Gujarat movement came to an end in March 1974, Jai Prakash Narayan in Bihar took the reins of another students’ agitation and trained guns at Indira Gandhi, the then prime minister. The two protesting streams of public anger met and threatened Indira Gandhi’s regime, which responded by imposing emergency on June 26, 1975.

But an analysis of the prevailing economic conditions suggests that Indira Gandhi might have used the political agitations against her to escape the economic crisis that her government had failed to manage.

Indira Gandhi had won the 1971 Lok Sabha elections against all odds –

battling a split in the Congress and a united Opposition – with her “garibi hatao” (eliminate poverty) slogan. Poverty elimination required economic reforms, strengthening educational and training institutions and rapid growth in agriculture and industrial sectors.

Lok Sabha elections were held in March, 1971 when Indira Gandhi raised expectations of the people. By May 15, India was drawn into Bangladesh liberation war with Indira government starting to aid Mukti Wahini. On August 16, Indian Army launched Operation Jackpot – the Indian codename name for Bangladesh liberation war.

Officially, the cost of the 1971 war for Indira Gandhi’s government was around 200 crore a week. It was a huge cost given the scale of economies of the day. It impacted the GDP growth rate for 1971-72 as economy grew by 0.9 per cent only. There was additional cost of feeding over 1 crore Bangladeshi immigrants. Budgetary deficit has climbed up.

The rain god also did not help out Indira Gandhi. Monsoon failed in succession in 1972 and 1973. Most parts of the country faced droughts. Massive shortage of foodgrains was reported from all regions pushing the prices up. India was still importing foodgrains for sustenance. The war had eaten up a large chunk of foreign exchange reserve, which depleted further with rising cost of foodgrain import.

Failed monsoon and fall in agriculture production also led to drop in power generation and very low demand for manufactured goods. Industrial production went down. Lay-offs were too frequent and too many in all industrial centres. This led to sharp spike in unemployment.

Rising unemployment and low income reflected in poor healthcare and school enrolment. One estimate suggests that there were more illiterate in India in 1975 than they are in 1947 at the time of Independence.

International developments too damaged India’s economy in pre-Emergency days. West Asia was in turmoil and 1973 oil shock drained foreign exchange reserves of India further as the crude oil prices jumped four times from USD 3 per barrel to USD 12 per barrel within days. Though petrol and diesel prices were under the government control, the prices of petroleum products and fertilisers increased sharply.

Rising prices were bogging Indira Gandhi government down in public eyes. Inflation was 22 per cent in 1972-73, over 20 per cent in 1974 and over 25 percent in 1975. It affected all. Writing in his blog, Union Finance Minister Arun Jaitley referred to two finance ministers of Indira Gandhi government showing helplessness about rising prices.

Presenting Budget on February 28, 1974, YB Chavan said that “prices continue to rise” while there was “steep fall of 9.5 per cent in agricultural output” and “there was hardly any increase in the rate of growth of industrial production in 1972”.

A year later, the then Finance Minister C Subramaniam said in his Budget speech: “Inflation has been spreading and its devastating impact on the living standard of our people and on the pattern of real incomes within the country has been serious enough.”

Farmers, labourers and daily wage workers were the worst hit by rising prices and loss of employment on the eve of imposition of Emergency. But the government had responded with more regulations to control market and industries. The measures practically brought investment to a halt and further loss of jobs.

Under these circumstances, trade union leader George Fernandes led nationwide 22-day transport strike. This brought “starvation” to cities as supply of essential commodities stopped. Pura ration pura kaam, nahin to hoga chakka jam (Ensure full ration and employment else we will bring the nation to standstill) was the slogan of the protesters. Food riots were witnessed in many parts of the country.

 

 

 

News credit : Indiatoday

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