June, Emergency, and Economics: The Roots of Indira Gandhi's 1975 Decision

(This is part three of a four-part 'June' series that revisited significant historical events or policies and how the lessons learned from them continue to be of relevance in present-day politics and society. Read part one here, part two here, and part four here.)

It was a hot and sweltering day in Allahabad (now Prayagraj) as Justice Jaganmohan Lal Sinha sat down to deliver a historic verdict on June 12, 1975. Raj Narain, who had lost the Rae Bareilly Lok Sabha seat to Indira Gandhi in the 1971 Lok Sabha elections had filed a petition accusing her of electoral malpractice.

Two legal titans had made brilliant arguments in favour of their clients: Nani Palkhiwala for Indira Gandhi and Shanti Bhushan for Raj Narain. Justice Sinha sent shockwaves through India by holding Indira Gandhi guilty of electoral malpractice and disqualifying her for six years.

Jayaprakash Narayan, a friend of Jawaharlal Nehru, had already declared war against Indira and advocated a “Total Revolution” in 1974. He and a plethora of opposition leaders demanded the immediate resignation of prime minister Indira Gandhi. The Supreme Court did not provide any immediate relief to her.

Less than two weeks later on June 25, there was a midnight knock at Rashtrapati Bhavan when President Fakkuruddin Ali Ahmed was persuaded to sign a proclamation that announced an Emergency in India. Nani Palkhiwala resigned as her lawyer in protest; Shanti Bhushan eventually went on to become the union law minister in the Janata Party government in 1977.

Indira: Authoritarian in a Unique Way of Her Own

Hundreds of treatises have been written about the Emergency. Why did Indira Gandhi take such a dictatorial decision? Was she spooked by the intensity of political protests against her government? Why did the media, barring the few honourable exceptions, crawl when it was asked to bend? How much damage did the Emergency do to institutions and political culture in the country? What happened between her weeks and months of glory in 1971 to that dreadful day in June 1975 when Indira Gandhi imposed the Emergency and locked up virtually all those who raised a voice against her?

Indira Gandhi rends out to be authoritarian in a unique way of her own. Most dictators refuse to leave office unless they are forced to, and elections (unless “managed”) are anathema to them. Yet, she herself lifted the Emergency and called for fresh Lok Sabha elections where she and the Congress were resoundingly defeated. Unlike other dictators, Indira Gandhi gracefully accepted her defeat and started plotting her electoral comeback. That happened earlier than expected in early 1980 when Indira Gandhi stormed back to power.

These events and decisions have made Indira Gandhi an enigma. Scholars, historians, and analysts are still debating the factors and cases that led to the imposition of the Emergency. Intriguingly, almost all the commentary related to the Emergency revolves around politics. This theory suggests that it was a persistent political crisis that eventually made Indira Gandhi the draconian decision.

It all started in the hostel canteen of a college in Gujarat in 1974 where students rose in protest against a hike in mess fees. The protests spread like wildfire and the epicentre shifted to Bihar where an aging and ailing Gandhian Jai Prakash Narain contended that Indira Gandhi had lost both political legitimacy and the support of the ordinary people. He called for a Total Revolution against her regime through Gandhian acts of civil disobedience. Simultaneously, the firebrand socialist politician George Fernandes (who became the Union Defence Minister in the Atal Bihari Vajpayee regime during the winter of his life) persuaded close to 1.8 million employees of Indian Railways to go on strike.

Life was paralysed. Hartals, Bandhs, and agitations continued to fester till 12 June 1975, when Indira Gandhi was disqualified. The Emergency became inevitable as Indira Gandhi was in no mood to resign. In any case, once the Emergency was imposed, a “friendly” Supreme Court stayed and eventually reversed the disqualification. That has permanently sullied the Supreme Court as an independent institution.

The Chronic and Persistent Economic Crisis

Strangely, most commentators seem to have ignored one obvious reason or the “root cause” that eventually led to the Emergency. The answer, as a matter of fact, lies in economics. Having gone through reams of data and numbers from that era, the authors are convinced that it was a chronic and persistent economic crisis that triggered the political crisis that ended with the Emergency.

A quick look at the chart showing food grains output will make it clear where the genesis of the crisis lay. In the 1960s, India would literally go overseas with a begging bowl for food aid. A failure of the monsoon in 1966 and 1967 led to a severe drought with estimates that about 100,000 Indians died of starvation. Yet, the Indian economy was overwhelmingly dependent on agriculture. There was hardly any services sector the way we understand it now.

The industrial sector was stifled by the license permit Raj. So there was a huge sigh of relief among economic analysts when food grains output reached a record level of 108 million tons in 1970-71. During that period, Indira Gandhi won the 1971 Lok Sabha elections. But good news from the economic front ended there. The monsoon kept failing and food grains production struggled to meet demand. The Green Revolution was still some distance away. In 1970-71, the population of India was about 550 million, and food grains output was a shade more than 108 million tons.

By 1974-75, the population of India had grown to about 625 million while food grains output had fallen to about 100 million tons. Something had to give. In the 1960s, America had repeatedly bailed India out through an assistance program called PL-480 where wheat was given free of cost for consumption in India. But relations with the Richard Nixon administration in the US were so bad in the early 1970s that even this window was closed. India’s new ally Soviet Union itself faced food shortages.

And then came the oil shock that made matters worse. In 1973, a group of Arab nations led by Egypt and Syria invaded Israel when citizens were observing the holy day of Yom Kippur. After initial reverses, Israel inflicted a humiliating defeat on the Arab nations, thanks to a generous supply of arms by the United States. The Arab and Islamic nations that then dominated the Organisation of Petroleum Exporting Countries were incensed. The OPEC announced onwards the end of 1973 that member countries would raise crude oil prices by four times. There was massive economic devastation across the world in countries that depended on imports of oil. One immediate fallout was a massive spike in inflation.

Economic Roots of a Political Agitation

The persistent failure of the monsoon led to an average inflation rate of 17% in 1973. Food inflation, which hurts the poor even more, was even more. After the shock delivered by OPEC that led to a massive increase in petrol and diesel prices, the average rate of inflation soared to about 29% in 1974. In a column published in April in this series, the authors analysed how the disastrous economic decision of April 1973 by Indira Gandhi to “nationalise” the food grains trade made matters worse. She did revoke that policy in 1974.

But the damage had been done. Two movies portray the angst, frustration, and anger of ordinary Indians over their economic plight. Mere Apne starring Meena Kumari, Vinod Khanna, and Shatrughan Sinha was a powerful and brilliant depiction of the helplessness of Indian youth. The more kitschy Roti, Kapda Aur Makan, a multi-starrer helmed by Manoj Kumar accurately depicted the economic misery caused by chronic food shortages and high inflation.

Not to speak of persistently high unemployment rates, particularly among urban youth. While accurate and comparable data is not available, studies by International Labour Organisation and the World Bank suggest that urban unemployment in the early 1970s was in the double digits. Even today, educated youth find it very difficult to find productive jobs that match their skills. But thanks to a massive service sector, they at least have livelihood opportunities that make them financially independent. Young Indians in the 1970s simply did not have that option.

Do remember, the agitations against Indira Gandhi peaked in 1974. That was when people stood for hours in front of ration shops for food and families were crippled by inflation. Sure, the agitations were political in nature. But the roots lay in economics.

(Yashwant Deshmukh & Sutanu Guru work with CVoter Foundation. This is an opinion piece and the views expressed are the author’s own. The Quint neither endorses nor is responsible for them.)