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Indian Express
2 days ago
- Business
- Indian Express
The crisis before the crisis — how a failing economy was one of the triggers for the Emergency
While a swelling Opposition campaign and an Allahabad High Court order setting aside Prime Minister Indira Gandhi's election to the Lok Sabha in 1971 were the immediate trigger for the imposition of Emergency, trouble had been brewing for the better part of a decade in the non-political sphere. After a strong 1963-64 and 1964-65, over which GDP growth averaged 6.7%, the Indian economy was hit by a phenomenon not seen in 75 years of official data — two consecutive years of decline in overall economic activity. In 1965-66, India's GDP shrunk by 2.6%. This was followed by a 0.1% decline in 1966-67. It was because of another rare occurrence — consecutive droughts. According to a 2005 India Meteorological Department paper, the previous 130 years had only seen one such other case, in 1904 and 1905. Inflation, as a result, shot up to nearly 16% in 1966-67. The twin droughts came at a time when India was already a huge importer of foodgrain. With grain output crushed by a fifth, India leaned heavily on the US's PL-480 scheme for grain – under which the US distributed foreign food aid – and was soon the programme's biggest beneficiary. Not helping matters was the tension with Pakistan, with the Budget for 1965-66 estimating that of the total revenue expenditure of Rs 2,116 crore, Rs 749 crore or roughly 35% would be spent on defence services. 'With two wars (1962 and 1965), a series of poor harvests including two droughts, and an unstable external environment, the 1960s were years of severe strain for the Indian economy,' as per the second volume of the History of The Reserve Bank of India (RBI). India also required significant financial assistance from Western countries and the World Bank. As its current account deficit rose to 3.7% of GDP in 1966-67 and foreign exchange reserves declined, there were concerns about how India would meet its external debt repayments. In June 1966 — just a few months after taking over as PM – Mrs Gandhi had already approved the devaluation of the rupee by 36.5%, to Rs 7.50 per dollar from Rs 4.76 per dollar. In the 10 years starting 1965-66, the economy averaged just 2.6% growth. The share of the biggest employer, agriculture, in India's GDP fell to 31.5% in 1966-67 from over 40% a decade ago. Come 1974-75, agriculture's share had changed little, being about 31.1%, while the share of manufacturing had edged up by 60 basis points to 13.8%. To say that Mrs Gandhi inherited a flailing economy in January 1966 would be an understatement. But the years that followed were not easy either, with her government's first challenge being the peasant movement in Naxalbari, which hit its peak in May 1967. While growth somewhat recovered in the late 1960s and averaged 5.7% in the four years ending 1970-71, by then Mrs Gandhi, having survived a split in the Congress, had nationalised banks, abolished privy purses and privileges and hiked income tax rates to above 90%. Her government had also approved a licence for her son Sanjay Gandhi to manufacture an 'Indian Volkswagen'. Amid all the tumult, Indira announced that the next general elections would be held a year early, in 1971. 'The millions who demand food, shelter, and jobs are pressing for action. Power in a democracy resides with the people. That is why we have decided to go to our people and seek a fresh mandate from them,' she said in December 1970 in a broadcast to the nation. As the Opposition came up with the slogan 'Indira Hatao', she countered with 'Garibi Hatao (remove poverty)'. While this worked, the tide was already turning before an old foe struck again – India saw another drought in 1972. 'As famine loomed in rural India, Indira's slogan 'Garibi Hatao'…came back to haunt her. She told her growing chorus of critics that poverty could not be eradicated overnight. They said she was not removing poverty; she was removing the poor,' American biographer Katherine Frank wrote in her 2001 book Indira: The Life of Indira Nehru Gandhi. The domestic unrest was fuelled further by the 1973 oil crisis, which pushed up wholesale inflation to more than 20%. The government responded by cutting expenditure and enforcing mandatory savings on salaries. Corruption was rife, factories shut down, and strikes became regular. Pressure further increased against the Indira Gandhi government with the successful Navnirman Andolan in Gujarat and a 1974 Railway strike led by George Fernandes, then president of the All India Railwaymen's Federation. The rail strike was cited by Mrs Gandhi as an attempt by the Opposition to paralyse the country for political gains. It was crushed with wide-scale firings and evictions from staff quarters, among other measures. However, the end was nigh. June 12, 1975, was a particularly difficult day for Indira. First, her confidant and then Ambassador to the Soviet Union, D P Dhar, died in hospital. Then came the results of the Gujarat Assembly elections, with a united Opposition under the Janata Morcha defeating the Congress. Finally, in the afternoon, came the Allahabad High Court order. Less than two weeks later, the Emergency was declared.
Telegraph
18-02-2025
- Politics
- Telegraph
A demilitarised zone won't work – Russia and Ukraine must enforce peace themselves
If sitting through a Putin history lecture is the price of peace, then Donald Trump has already made a great sacrifice for humanity. The Trump-Putin call to decide the fate of Ukraine began with a monologue about the 'Great History of our Nations' before Trump could get a word in; but if it brings an end to the war, maybe we should all endure a few more 'lessons' from Professor Putin. President Trump revealed that he has directed that ceasefire negotiations begin. As momentum builds for a ceasefire in Ukraine – an essential first step toward elections and a lasting peace accord – we must be clear-eyed about the dangers of a misguided approach. Some voices have suggested establishing a demilitarised zone, policed by UN peacekeepers or European forces or even NATO, as a mechanism for securing this ceasefire. This is a grave mistake. It is a fantasy conjured by those who do not understand the realities of modern war, the limitations of international forces or the brutal nature of Vladimir Putin's strategy. It is a solution that, in practice, will lead to escalation, not peace. The argument for a DMZ assumes that international forces – whether UN blue helmets, European troops, or even NATO peacekeepers – can somehow enforce a ceasefire between two of the largest standing armies in Europe. This is an illusion. The proponents of a plan that puts peacekeeping forces on the dividing line are misguided. What kind of peacekeeping force could be placed between two of the largest and most experienced armies in Europe, fighting across a 3700 kilometre front line? These forces comprise 1.5 million soldiers with three years of modern warfare experience. More to the point: How many casualties would European countries be willing to accept in a year of their peacekeeping mission when the warring parties have already lost nearly a million over several years? There will be losses – significant ones – because provocations are inevitable. The warring parties have not yet reached their critical threshold of losses, whereas for Europe, the deaths of even a few hundred soldiers and officers would be a political catastrophe. The formula for peace – ceasefire, elections, negotiations, peace agreement, trade deals and the beginning of reconstruction – is the optimal path and a new opportunity for Ukraine and peace in Europe. This path, which must be covered over nine months to a year, contains several critical crossroads and dangerous turns. One of the most significant questions concerns the demarcation of the warring parties and the creation of a demilitarised zone. The idea that a few battalions of European peacekeepers – whose combined forces are a fraction of that size – could police this war is absurd. In 2024, the German Army's roster counted 64,000 active duty soldiers; there are 30,000 casualties in the war every month. In two months of war, the German Army would not exist. Could they ever be an effective peacekeeping force? Who will keep the peace between armies that dwarf those of the so-called peacekeepers? President Trump made clear today: The United States will not keep the peace by force; and without the US, nobody else can. The question is moot, however: A DMZ is not a shield; it is an invitation to disaster. The moment UN, EU or NATO troops set foot in Ukraine as 'peacekeepers,' they become targets for Putin. Consider a UN or NATO force – Lithuanian, for example – establishes a peacekeeping perimeter; a 'stray' Russian shell lands in their camp, with 30 soldiers dead. Lithuania would invoke Article 5 of NATO's treaty, demanding collective retaliation. If NATO soldiers are placed in a demilitarised zone, it is only a matter of time before Putin tests our resolve. Would NATO go to war? Or would it hesitate, exposing the Alliance's weakness? Either scenario is a gift to Putin. He would either drag NATO into war or humiliate the West by showing that Article 5 is a paper shield. This is the real risk. But if a foreign-policed DMZ is impossible, what is the alternative? The answer is both simpler and stronger: A military ceasefire negotiated directly between the Ukrainian and Russian general staffs. NATO can and should enforce a no-fly-zone over Ukraine during the ceasefire and, on mutually beneficial terms, will assist in rebuilding Ukraine's economy – but after that, it will be up to Europe. Europe needs Ukraine – and its army. This is why the West must help Ukraine conduct presidential and then parliamentary elections, and assist the new Ukrainian leadership in forming a reasonable compromise for long-lasting negotiations with the Putin regime. Ukraine and Russia have been fighting for over 11 years. Russia is the clear aggressor in this war, but every war eventually ends in peace. The time has come for the warring parties to assume their share of responsibility in the peace settlement proposed by the US President – and to face the test of mutual accountability. They must enforce the peace themselves. The role of other countries should instead be monitoring and structured dialogue. The United States should take the lead in establishing a five-party commission – a body to monitor compliance, prevent conflict and ensure ongoing dialogue. This commission, composed of the US, China, Europe, Russia and Ukraine, could oversee the ceasefire and manage disputes. Representatives could be personally appointed by their heads of state, with the authority to act decisively – not bureaucrats, but real decision-makers. Such a commission could be set up immediately as part of President Trump's peace framework. It could meet regularly, have direct crisis-response protocols and operate without bureaucratic delays. The more business leaders and experienced military officials involved – the faster and more effectively the peace process can be guided to a positive conclusion. President Trump is a businessman, as are many of his top officials; he knows the value of decisive action.
