Author: Abhishree Pandey
“The Emergency” refers to a 21-month period from 25 June 1975 to 21 March 1977 when the Prime Minister was bestowed with the authority to rule by decree, allowing elections to be suspended and civil liberties to be curbed. For much of the Emergency, most of Prime Minister Indira Gandhi’s political opponents were imprisoned and the press was censored.
Several other human rights violations were reported from the time, including a forced mass-sterilization campaign spearheaded by Sanjay Gandhi the Prime Minister’s son. The Emergency is one of the most controversial periods of the relatively short history of Independent India. This paper is an attempt to examine the economic consequences, if any, of the Emergency, which had far reaching politico-social fallouts.
It is important to note here that the initial reaction towards Emergency by the middle and lower socioeconomic class was positive. There was calm and tranquility as the students, after months of agitation returned to classrooms; demonstrations came to an end. There was less crime in the cities as most of the smugglers, black marketers, hoarders, illegal traders, and troublemakers were in prison. Another area of improvement was Government Administration. Anecdotal evidence suggests that Government servants came to the office on time and were more considerate to the public.
Before examining this matter, we must clearly understand that Emergency was basically a political event at a time when economy and economic growth meant very little for India. In 1975, there was no private sector in India worth the name. This was the heyday of Command Economy and of Licence-Quota-Permit raj! Having said that, since emergency was basically a classical dictatorship, its impact on the country meant that, at the surface level, there was greater efficiency in the functioning of various machineries of the Government.
This led to more efficient functioning of public utilities like Railways and airlines (though hardly anyone in those days could dream of flying). The PDS also functioned more efficiently and items like substitute desi ghee (imported butter oil) and Rs 1 toilet soap (Jantata from Tata and Saral from HLL; the latter was for 80p and its jingle went like this: assi paise me lelo saral sabun) were available at ration shops.
All this indeed led to a perception that on economic front, the Emergency had some positive impact. In fact, the key economic indicators showed commendable growth during the F.Y. 1975-76, which led many to wonder if the dictatorship was really a recipe for economic growth. As per the Economic Survey of Government of India for the F.Y. 1978-99, the Gross National Product at 1970-71 prices grew at the rate of 8.9% during the F.Y. 1975-76 (compared to dismal 0.8% during the preceding FY).
The agricultural production grew at 15.6%, while food grain production showed growth of massive 21%. Similarly, the growth in industrial production was an impressive 6.1% and that in exports was 21.4%. The wholesale prices showed a decline of 1.1% during the year, as compared a whopping rise of 25.2% in the preceding year. (Source: Economic Survey, 1978-79)
All this led to a sort of euphoria, in part fueled by government propaganda as well, that better days in terms of state of economy were round the corner. We must not forget that those were the days when poverty was a serious challenge. As per the Planning Commission data quoted in the Economic Survey 2001-02, in the year 1973-74 (a year before the Emergency was imposed), 54.9% of the total population (56.4% rural population and 49% urban population) of the country was living below the poverty line.
However, any remote notion that a relatively robust performance in the FY 1975-76 was not an aberration was quickly dispelled the very next year. The most important feature of the economic situation in FY 1976-77 was reversal of the declining tendency in prices, which had begun in September 1975 and continued through the year 1975-76. The Wholesale Price Index (WPI) (1970-71 = 100) which had declined by 11.6% between 28.09.1975 and 20.03.1976 rose by 11.9% by 26.03.1977.
The All India Industrial Workers’ Consumer Price Index (CPI) (1960 = 100) also showed a tendency to rise during 1976-77, though the increase was of smaller magnitude. It rose from 286 in March 1976 to 312 in March 1977. The major cause for this poor performance was largely attributable to shortfall in the production of a few basic commodities and re-emergence of a substantial imbalance between aggregate demand and supply in the economy. (Source: Economic Survey, 1976-77).
The growth in Gross National Product fell to mere 1.6% in the FY 1976-77 as against 8.9% in the preceding FY. Growth in agricultural production and food grain production, both, were negative: (-) 6.7% and (-) 7.8%, respectively. The only relative bright spot was Industrial Production, which grew at a healthy rate of 10.4%, as compared to 6.1% in the preceding year. While exports showed a growth rate of 27.2%, the imports fell with negative growth rate of 3.6%. (Source: Economic Survey, 1978-79)
As is clear from the above, there were hardly any direct economic takeaways of the Emergency. However, certain steps taken by the Government contributed indirectly to significant consequences – largely unintended at that time- in the years to come.
In the field of infrastructure, manufacturing and big industry as well as commerce and banking, Emergency had little impact. Everything was either in the hands of Government or ruling party linked industrialist houses. Just to take the example of TV set manufacturing, till 1975 the two families making TV sets in India were Sarabhais of Ahmedabad (Telerad TV) and Singhanias of Kanpur (JK TV).
Similarly, cars were manufactured by Walchand Hirachand (Fiat) and Birlas (Ambassador) – both had a handsome booking amount and long waiting list. Scooters were manufactured by Public Sector, Scooter India Ltd. of Lucknow and Bajaj. Of course, Bajaj Scooters commanded substantial black market.
In this background, perhaps the most important contribution of Emergency that connects our present lifestyle directly to an action taken by the Government during the Emergency is the ubiquitousness of Television (TV). In June 1975, TV was a luxury which could be afforded only by the very rich. Sanjay Gandhi made his mother, the then Prime Minister, Indira Gandhi realise the importance of TV in controlling the minds and thinking of the largely semi-literate people (it could be perceived as granddad of present social media!!).
Consequently, two things were done: like the toilet soap, TVs were also made cheap and easily available. Prior to Emergency, there were only two manufacturers of TV sets in India, and TV sets had a waiting time. It seems ridiculous to imagine now, but, yes, those were the days where waiting period to possess a TV set was a very normal thing. The cheapest set cost at least Rs. 5,000. Through one diktat of the Government, TV sets were made freely available for about Rs. 2,000 and new manufacturers like Weston, Bigston and Crown came in the field.
On the reach side, many new TV stations were set up during this period and for the first time, satellite TV was started through French satellite Arian: it was called SITE (Satellite Instructional Television Experiment). The project was supported by various agencies, such as the UNDP, UNESCO, and UNICEF.
Through SITE, TV programs were simultaneously telecast in 2500 villages of 6 states. It was a huge deal those days. Content was, of course, socialistic sort of education and propaganda, but it opened the floodgates. Advertisements of consumer goods started because of the larger audience reach.
The success of SITE led to India embarking on its own satellite programme through ISRO, which in the years to come had a significant impact on the economy and education. A window to the western world in terms of TV serials based on western classics and through live telecast of important sports events was opened, which shaped an entire generation of Indians growing up in 1970s and 80s.
Perhaps, this was the only lasting legacy of the Emergency in India.