It is generally accepted wisdom that the Indira Gandhi years were the pinkest in India’s economic history. Also, that her second phase (at the peak of her glory in 1971 till post-Emergency fall in 1977) was the most deeply socialist of three, the first being 1966-71 and the third 1980-84. Some of India’s worst economic laws were enacted by her largely illegitimate Parliament during the Emergency, some even in its embarrassing sixth year. Most symbolically notable of these is the word socialist, along with secular, added to the Preamble of the Constitution.

The 30th anniversary of her assassination would probably have passed less eventfully if the formality of the usual official ceremony had not been dispensed with as Sardar Patel’s birth anniversary on the same day got precedence, as you would expect now that we have our first Government of the Right, and unabashedly so. But this controversy provided just the spark needed to reignite some fresh debates on the years of our most significant prime minister so far. Much of the stuff on her politics, creative destruction of the Congress and Emergency, her iron will and patriotism is familiar to most Indians.

Fresh, intriguing and sometimes pleasant surprises, however, emerged on how her economic thinking evolved over these years. As you would expect, T.N. Ninan, our most formidable commentator on economy and business (and my executive editor at India Today, 1985-88), initiated this with a provocative column a few days before the anniversary. He said, intriguingly, that far from reinforcing her socialist drive, Indira Gandhi had actually begun to loosen things up, or at least start some review and introspection by the end of 1974, a year before the Emergency.

Briefly, his thesis is that by this time India was in deep economic distress. Inflation was running high, there was widespread popular disenchantment, and Indira made her most significant economic blunder yet. Under pressure from her durbari Leftist cabal, D.P. Dhar, P.N. Haksar, etc, she nationalised grain trade that too in a crisis year for agriculture. It caused such anger among farmers that, for the first time in her prime ministership, she was forced to withdraw a major decision. This set in motion the process of review and rethink. This was strengthened by two personalities, though one in departure and the other in arrival. In 1973, an Indian Airlines crash in New Delhi took away her steel and mines minister, and her most leftist comrade, Mohan Kumaramangalam, a former Communist Party member who had learnt as much ideology at Kings College, Cambridge, as law. Second was the rise of Sanjay Gandhi who, at least on his view of business and economy, was Kumaramangalam’s opposite, even if you would not describe him as a libertarian in any other manner whatsoever.

We journalists are not historians, scholars or astrologers. Our skills are generally limited to faithfully observing and chronicling the present, not searching the past or predicting the future. Let’s pass astrology for now, but thankfully we still have wonderful historians whose work we can rely on. You can find a great deal of wisdom and insight, for example, in Srinath Raghavan’s brilliant essay on Indira Gandhi in Makers of Modern Asia, edited by Ramachandra Guha.

Raghavan says Indira’s “socialist phase” continued till 1973. But this momentum was broken by a crisis inevitable in a post-war, populist economy. Monsoon failures and the 1973 oil shock, he reminds us, had taken our inflation rate to 33 per cent by late 1974. This also fuelled the JP movement. Indira first resorted to a tough anti-inflation squeeze, never mind the warnings of her Left ideologues that these would annoy people. She preferred, Raghavan tells us, the advice of the “more liberal” economic advisors, led by that virtuous usual suspect, Dr Manmohan Singh. She also approached the IMF for a $935 million (a lot then) bailout, quietly allowed the rupee to depreciate, thereby improving India’s exports and reserves. Raghavan argues that 1973-74 “marked an important turning point” in her economic policy, one that remains “underappreciated”. The shift, he says, was attitudinal more than substantive, but it brought growth. During 1975-78 India grew at 6 per cent per year, which was twice the fabled Hindu rate.

He quotes extensively from a fascinating exchange of letters between Indira and her close advisor and cousin, B.K. Nehru, whose views on economics seemed more liberal than on individual liberty he had hailed the Emergency as a “tour de force of immense courage”. Now he was telling her to replace garibi hatao with utpadan badhao (increase production). Some of Nehru’s lines are stunningly prescient, and we have been repeating the same thought, even if not so succinctly, during Sonia Gandhi’s povertarian UPA 2. Raghavan quotes a December 1974 letter from an irritable Indira reminding Nehru that “under present conditions there can be no economic growth which ignores social justice” (Sounds familiar?). Nehru bravely joins that battle of ideas by asking whether “social justice [means] equality in poverty or growth in the size of the national cake which may continue to be divided in unequal portions if necessary”. He goes on to argue that “all other objectives should be subordinated to this one objective of increasing production”. This isn’t much different from an oft-repeated lament of “equal distribution of poverty” by my economist friend Surjit Bhalla, who P. Chidambaram describes as being way to the right of Adam Smith, and which led me to the discovery of that trade-marked term, povertarianism.

But if one air crash had broken the socialist momentum, another intervened to disrupt her reformist phase as Sanjay died in his aerobatic plane so early in her new term (June 23, 1980). Indira did lose her will and spirit to a great extent and was never the same again. Her intellectual shift, however, continued.

I have it on the authority of several key officers and advisors who watched her closely, including foreign service giants like Jagat Mehta and J.N. Dixit, that she felt rotten at the position India was forced to take on the Soviet invasion of Afghanistan. She felt humiliated that some of the speeches by our envoys at the UN sounded more grating than those of the Cubans. She also-probably-had the sense that the Cold War was going to end, and India couldn’t afford to end up being totally on the loser’s side. There is evidence that she had begun course-correction on foreign policy as well. In the 1981 multilateral summit at Cancun, Mexico, I believe she sought out Ronald Reagan, her first contact with the US at a high level after her disastrous time with Nixon. The following year she visited Washington and a process of mending relations was well and truly under way. She seems to have realised that in the new global strategic and economic order after the Cold War, India could not carry on being at odds with the West.

By 1983, however, India’s internal security situation had deteriorated badly and left little scope for further economic action. Nellie and other massacres happened in Assam in February 1983. By this time Bhindranwale had risen, guns and all, in Punjab as well. What followed, until her assassination three decades ago, is relatively better known, more recent history. She has been deservedly given a place in history as a great patriot and martyr, a champion of India’s integrity and sovereignty. Could it be that we have not yet fully appreciated her intellect and prescience on economic and foreign policies?

Postscript: While I was a full-time reporter 1977 onwards, I was too junior to get much opportunity to observe Indira Gandhi closely. My first, 10-minute, conversation with her was in 1979 as I button-holed her during a transit stop in Chandigarh, en route to Srinagar. She was out of power then, and had the patience for a persistent little reporter. I saw her up close again in somewhat different circumstances four years later as she came to Nellie a day after the terrible massacre that left more than 3,000 Muslims dead. There was fury writ large on her face. “Kitna dhoola udta hai” (how awfully dusty is it), she said several times as she walked out of the helicopter, its rotors hardly fully stationary yet. But her anger was not over the clouds of dust, as we soon saw.

She first looked daggers at KPS Gill (Inspector General of Police, Law and Order, in Assam) as if he were some delinquent neighbour and asked: “Kab tak jalta rahega yahan?” (Until when will this place burn?) Only Gill could have the nerve to deal with that. “Let elections be over, Madam,” then we will bring it to normal. Indira ignored him and walked ahead, officers, local party leaders struggling to keep pace.

She looked at the carnage, hundreds of bodies, fresh graves, the wounded. I do not believe I detected a tear in her eye. Just plain anger. As she turned around, the cowering figure of R.V. Subramanian, who ran the state under president’s rule as chief advisor to the governor. “Teen hazaar Mussalman maare gaye, kaun jawab dega inko?” I remember she said “inko” and not “iska“. She wasn’t asking who was guilty, the first question was a moral, and political, one: how will we answer the Muslim minority?

By this time I saw her eyes turn moist. She put on her sunglasses, repeated the same question to a speechless Subramanian, turned and trudged back to her Mi-8, never mind the dust its rotors had already begun to churn. One thing I can tell you for sure. She would have been even more furious at the anti-Sikh carnage that followed her assassination.

This was published as National Interest on 6 November, 2014. 

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  1. […] No such thing happened, but the poor continued to be fooled, and she kept winning elections, even as the socialist riches looked more and more mythical, until the oil shock of 1973 (after the Yom Kippur war) and other changes pushed India’s inflation rates into late 20s, fully exposing her sham economics. For 40 years since then, India has been trying to regenerate the scorched earth she left in her manic socialist phase. She herself realised its folly but too late, as we examined in another National Interest. […]

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