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.
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.
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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.
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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.
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Economic data bears this out. If we bracket the year 1979, when Indian GDP fell by 5 percent owing to the second oil shock following the Iranian revolution, India's economic growth in second half of the 1970s averaged a healthy 6 percent - a figure that is comparable to the "boom" of the 1980s. The increase in per capita GDP was accompanied by an increase in productivity owing to higher capital investment. In particular, there was a spectacular rise in private equipment investment since the mid-1970s. Clearly the "animal spirits" of Indian capital were rising from around this time.
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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.
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(Srinath Raghavan is Senior Fellow at Centre for Policy Research, New Delhi)
Disclaimer: The opinions expressed within this article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of NDTV and NDTV does not assume any responsibility or liability for the same.
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