Obviously,
all these arguments are hollow and self-serving in the extreme.
The
opponents of emergency were equally wrong in their judgement.
They assumed, and continue to assume, that Indira Gandhi
was the problem, and therefore her removal was the solution
to our crisis. There is no appreciation that Mrs Gandhi
was merely the symptom of the underlying crisis. Therefore
any means - agitations, court verdicts based on technicalities
- could be adopted to unseat a democratically elected government.
This fallacy continues even today, and much of our political
discourse is dominated by demonizing rival politicians and
obsession with change of players, and there is no deeper
appreciation of the need to change the rules of the game.
In
much of this partisan and emotional debate, the underlying
economic and political factors which led to the distortions
of state power are ignored. In the ultimate analysis, the
roots of emergency lay in the license-permit-quota raj which
created a kleptocratic, rent-seeking state in the name of
the poor. Nehru's socialism was largely constructive, if
deficient. It was constructive because the emphasis was
on institutions, infrastructure and core industries; and
deficient because there was no space for decentralization,
nor sufficient emphasis on human development through education
and healthcare. But on the whole, we cannot fault the intentions
or actions of the Indian state in the first 15 years of
our republic. The next decade which saw the dominance of
Indira Gandhi was characterized by populism, state control
and corruption.
The
failure of the state was inevitable because no legitimate
space was allowed outside the state to fulfill aspirations.
The role of the state and its limits were never understood,
and the only response of the state was to impose ever tighter
controls. The ill-fated and short-lived decision of the
government in April 1973 to nationalize wholesale trade
of food grains probably marked the height of absurdity.
The abnormal levels of income tax rates, which at one stage
exceeded 90% on incomes over Rs.100,000 too created a culture
of black money and distorted the economy.
The
one positive development during that decade was the green
revolution heralded under Mrs Gandhi's stewardship, with
superb leadership provided by the able team of C. Subramanyam
and B N Sivaraman. Enhanced food grain production was possible
precisely because millions of peasants, and not the state,
owned the land. This perhaps was the crucial difference
between the Soviet Union, where collective farming was a
big contributor to the collapse of the system and demise
of the Union, and India, where food was produced and distributed
much better. But even on the agricultural front, markets
were completely distorted and the terms of trade were heavily
against the farmers. The net result was relative deprivation
of villages even as production increased.
With
rigidities induced by state policies, and entrepreneurial
initiative stifled by design, the economy had no capacity
to withstand any shocks. The effects of the oil shock of
October 1973 following the Yam Kippua war, and the droughts
which periodically plagued our monsoon-dependent agriculture
were devastating to our economy. Scarcities, controls, high
inflation, low incomes, high tax rates, large-scale evasion,
plunder of state resources, and endless corruption were
the inevitable features of our economy in those difficult
days.
The
victory of Janata and dismantling of emergency in 1977 gave
India a great opportunity to redefine the role of the state
and rejuvenate our economy. In our neighbourhood, Deng Hsiao
Ping did precisely that in 1978 by redefining the rules
of Chinese brand of communism. The results continue to astound
us even today. Despite Morarji Desai's undoubted libertarian
credentials, Janata squandered a priceless opportunity,
and once focus was lacking, the government collapsed in
squabbles. Ultimately it took an unprecedented fiscal and
balance-of-payments crisis in 1991 for us to join the bandwagon
of reform.
But
the real task of reform remains unfinished. What Dr Manmohan
Singh did in 1991 was to dismantle the more egregious aspects
of our regulatory and licensing regime, which held back
our productive potential. But our current growth rates,
impressive though by past standards, are well below our
potential and insufficient to combat mass poverty and deprivation.
But further growth cannot be promoted by more deregulation
alone. We need transformation of Indian state through political
and governance reforms to fulfil our true potential.
The
plight of Bihar, which was at the epicenter of the political
convulsions in 1975, as it is now, is a reminder to us of
the need for urgent political and governance reform. There
are many who dismiss Bihar as an aberration. But that is
both short-sighted and inaccurate, because there is a bit
of Bihar in every state of the Union today. In many ways,
Bihar is an extreme manifestation of the governance crisis
enveloping us today. The kleptocracy and rent-seeking which
characterized the state in 1970's continue today in different,
in some ways far more pernicious, forms. As the state controls
on the economy weakened, rent-seeking in economic decision
making diminished. But as the inexhaustible appetite for
illegitimate funds continues unabated, thanks to perversions
of our polity and electoral system, corruption has shifted
to far more dangerous areas from which the state cannot
withdraw. Satyendra Dubey's murder, Telgi stamp scam, Sanjeev
Don's 'entrepreneurial' ability to make large sums of money
by leaking question papers of all kinds, the growing criminal-police-politician
nexus, and the distortions of our justice system are but
some of the illustrations of the nature of our crisis today.
The
thirtieth anniversary of emergency is bound to result in
political posturing, emotional outbursts and partisan distortions
of history. What we need instead are a sober reassessment
of the events of 1970's, a deeper appreciation of the underlying,
and continuing economic and political factors, and an earnest,
bipartisan attempt to resolve our political and governance
crisis through systemic solutions.
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