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The Indian Economy 1947 - Present Day, 2016 ---------- Part 2

Discussion in 'World Affairs' started by PARIKRAMA, Mar 7, 2016.



    Jan 5, 2014
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    The Indian Economy 1947 - Present Day, 2016 ---------- Part 2



    I had posted a thread named The Indian Economy 1947 - Present Day, 2016 ---------- Part 1 on dated 03.03.2016

    Link: The Indian Economy 1947 - Present Day, 2016 ---------- Part 1

    As usual first a thanks to all members who have appreciated the work and encouraged me with feedback. Especially to @WAJsal who had been the original inspiration.

    And @AUSTERLITZ who had pointed few important pointers which I hope to incorporate and cover in this part.

    A special thanks to all the people who had commented and rated me thanks and positive ratings.. Your love, appreciation and encouragement always inspires me to rise up and meet your level of expectations. I do hope to do justice to the faith and confidence you all readers have put on me..

    In case of errors, please feel free to correct me.. and guide me to including correct perspective things ... also if i offend anyone, pls forgive me...

    Lets Start

    Basic Theme

    We have seen so far that India post gaining independence saw first PM Jawaharlal Nehru influence the shaping of economy of our nation. Post his death, the situation changed and many new challenges, obstacles, obsessions and politics was played which changed the shape of our national economy further.

    It would not be very surprising to note that this period also saw the perhaps most chaotic times post independence. Yet it has left a very deep impact in the history books of yesteryear's.

    As usual, the plan is to cover this period by the way of Five year plans and the timeline coinciding with Indian Prime Minister of that era Mrs Indira Gandhi. This part 2 will be filled with politics, controversies and economic side of this era.


    Indira Gandhi

    Small brief
    • Indira Priyadarshini Nehru was born on November 19, 1917, in Allahabad, India.
    • She was born into the politically prominent Nehru family.
    • Her father, Jawaharlal Nehru, served as India’s first prime minister.
    • Through her marriage with Feroze Gandhi (no relations with Mahatma Gandhi), she adopted the surname Gandhi and was now known as Indira Gandhi
    • Gandhi served three consecutive terms as prime minister, between 1966 and 1977, and another term beginning in 1980.
    • In 31.10.1984, Indira Gandhi was assassinated by her Sikh bodyguards.

    Early Life

    Nehru family, standing (L to R) Jawaharlal Nehru, Vijaya Lakshmi Pandit, Krishna Hutheesing, Indira Gandhi and Ranjit Pandit; Seated: Swaroop, Motilal Nehru and Kamala Nehru (circa 1927)

    Indira had spent part of her childhood in Allahabad, where the Nehrus had their family residence, and part in Switzerland, where her mother Mrs Kamla Nehru was recovering from her periodic illnesses.

    A Childhood picture of Indira Gandhi

    She received her college education at Somerville College, Oxford. She was known for two chief features namely
    • Exceptional Intelligence
    • Exceptional Stubbornness

    A famous photograph from her childhood shows her sitting by the bedside of Mahatma Gandhi, as he recovered from one of his fasts; and though she was not actively involved in the freedom struggle, she came to know the entire Indian political leadership.
    Young Indira Gandhi with Mahatma Gandhi

    After India's attainment of independence, and the ascendancy of Jawaharlal Nehru, now a widower, to the office of the Prime Minister, Indira Gandhi managed the official residence of her father, and accompanied him on his numerous foreign trips.

    She had been married in 1942 to Feroze Gandhi, who rose to some eminence as a parliamentarian and politician of integrity but found himself disliked by his more famous father-in-law, but Feroze died in 1960 before he could consolidate his own political forces.

    Feroze and Indira met during the independence struggle and they married in March 1942 according to Hindu rituals.

    Indira Gandhi with her Husband Feroze Gandhi.

    Early Life undocumented controversy

    As a young woman, Indira was admitted to Oxford University but driven out for non-performance. She was then admitted to Shantiniketan University, but Guru Dev Rabindranath Tagore chased her out for bad conduct as well.

    After being driven out of Shantiniketan, Indira became lonely as her father was busy with politics and her mother was dying of illness in Switzerland. Playing with her loneliness, Feroze Khan, the son of a grocer named Nawab Khan who supplied wines to Motilal Nehru’s household in Allahabad, was able to draw close to her.

    The then Governor of Maharashtra, Dr. Shriprakash, warned Nehru that Indira was having an illicit relation with Feroze Khan. Feroze Khan had gone to England and he was quite sympathetic to Indira. Soon enough she changed her religion, became a Muslim woman and married Feroze Khan in a London mosque. Indira Priyadarshini Nehru changed her name to Maimuna Begum. Her mother Kamala Nehru was totally against that marriage. Nehru was not happy either as converting to Islam jeopardized her political prospects of eventually becoming Prime Minister.

    Maimuna Begum (Indira Gandhi) with her husband Feroze Khan

    Nehru asked the young man Feroze Khan to change his surname from Khan to Gandhi. It had nothing to do with a change of religion from Islam to Hinduism. It was just a case of a change of name by an affidavit. And so Feroze Khan became Feroze Gandhi. Both changed their names to change the perception of the public of India. When they returned to India, a mock vedic marriage was instituted for public consumption.(pictures above) Thus, Indira and her descendants got the famous name of Gandhi. Both of her names, Nehru and Gandhi, are famous names.

    Another story, according to Mr. Arvind Lavakare is that Feroz had a Parsi father whose surname was "GHANDI" not "GANDHI". That was made clear by an advertisement in a major English newspaper of Allahabad. It was Mahatma Gandhi who suggested to Nehru that Feroze's surname be spelt as "GANDHI" instead of the original "GHANDI". An old columnist wrote that "Ghandi's" mother was originally a parsi who converted into Muslim, and since an offspring takes on the religion of its mother, Feroz ought to be considered a Muslim.

    Whatever be the case, Indira Nehru married Feroze (Khan) Gandhi in 1942 and became Indira Gandhi, which helped her politically as daughter of Nehru (the first Prime Minister of the Indian Union) and daughter–in-law of Gandhi (the father of the nation) securing her place in the future Nehru-Gandhi dynasty.

    This picture below depicts the true nature of this controversy as it depicts the family ancestral chart of Nehru-Gandhi family.

    It was said that Indira Gandhi's marriage with Feroze Gandhi soured over his infidelities. Feroze flirted with Indira's cousins, had an affair with Tarakeshwari Sinha, Mehmuna Sultana, Subhadra Joshi and others. She temporarily broke with him but as often happens, she forgave her husband. It is a known fact that after Rajiv’s birth, Indira Gandhi and Feroze Gandhi lived separately, but they were not divorced.

    The book “The Nehru Dynasty” (ISBN 10:8186092005) by K. N. Rao states that the second son of Indira (or Mrs. Feroze Khan) known as Sanjay Gandhi was not the son of Feroze Gandhi. He was the son of another Muslim gentleman named Mohammad Yunus.

    The book “The Life of Indira Nehru Gandhi” (ISBN: 9780007259304) by Katherine Frank sheds light on some of Indira Gandhi’s other love affairs. It is written that Indira’s first love was with her German teacher at Shantiniketan. Later she had affair with M. O. Mathai (father’s secretary), then Dhirendra Brahmachari (her yoga teacher) and at last with Dinesh Singh (Foreign Minister).

    Former Foreign Minister K Natwar Singh made an interesting revelation about Indira Gandhi’s affinity to the Mughals in his book “Profile and Letters” (ISBN: 8129102358). It states that- In 1968 Indira Gandhi as the Prime Minister of India went on an official visit to Afghanistan. Natwar Singh accompanied her as an IFS officer in duty. Indira Gandhi visit Babur’s burial place and told Singh “Today we have had our brush with history.” Worth to mention that Babur was the founder of Mughal rule in India, from which the Nehru-Gandhi dynasty have descended.


    Next part i will cover the political life, the rise of Indira to become the Prime Minister of India and the economic policies and performance thereafter...

    Stay Tuned.....
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    Jan 5, 2014
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    Political Career of Indira Gandhi

    • In 1947, Nehru became the newly independent nation’s first prime minister, and Gandhi agreed to go to New Delhi to serve as his hostess, welcoming diplomats and world leaders at home and traveling with her father throughout India and abroad.
    Nehru, Jawaharlal: Nehru and his daughter, Indira, greeting Harry S. Truman in October 1949

    • She was elected to the prominent 21-member working committee of the Congress Party in 1955 and, four years later in 1959, was named its party president.
    • In that capacity, she was instrumental in getting the Communist led Kerala State Government dismissed in 1959. That government had the distinction of being India's first ever elected Communist State Government.
    • She continued her work as hostess and building relations with multiple foreign delegates. In a way she was getting readied for her stint of prime minister ship.

    Gandhi, Indira: Gandhi and U.S. first lady Jacqueline Kennedy in New Delhi, India, March 1962
    Indira Gandhi (left) and U.S. first lady Jacqueline Kennedy (right) in New Delhi, India, March 1962.

    • Upon Nehru’s death in 1964, Lal Bahadur Shastri became the new prime minister and Indira became a member of Rajya Sabha
    • Indira took on the role of Minister of Information and Broadcasting
    • But Shastri’s leadership was short-lived; just two years later he abruptly died and Indira was appointed by Congress Party leaders to be prime minister.
    The story of year 1966
    • In 1964, the year of her father's death, Indira Gandhi was for the first time elected to Parliament, and she was Minister of Information and Broadcasting in the government of Lal Bahadur Shastri
    • Shastri died unexpectedly of a heart attack less than two years after assuming office.
    • The numerous contenders for the position of the Prime Ministership, unable to agree among themselves, picked Indira Gandhi as a compromise candidate, and each thought that she would be easily manipulable.
    • But Indira Gandhi showed extraordinary political skills and tenacity and elbowed the Congress dons -- Kamaraj, Morarji Desai, and others -- out of power.
    • She held the office of the Prime Minister from 1966 to 1977

    Time Magazine wrote the following -

    When Shastri suffered a fatal heart attack on Jan. 11, 1966, Gandhi became one of the leading candidates to replace him, receiving the support of Congress Party leader Kumaraswami Kamaraj Nadar. “Increasingly, Kamaraj found that the person with the fewest serious enemies, the widest reputation and the most attractive personality was Indira Gandhi,” wrote Time.

    On Jan. 19, the Congress Party held its vote for prime minister. Gandhi received 355 votes, while her only competitor, Morarji Desai, received 169. Following her victory, Gandhi gave an address to the Congress Party.

    “As I stand before you,” she said, “my thoughts go back to the great leaders: Mahatma Gandhi, at whose feet I grew up, Panditji, my father, and Lal Bahadur Shastri. These leaders have shown the way, and I want to go along the same path.”

    The behind the door story of Indira as First Female PM of India

    AFTER his heavy responsibility and laborious work for over 17 years to bring about a functioning democracy in India as head of the Interim Government and as Prime Minister, Jawaharlal Nehru breathed his last on May 27, 1964. His demise plunged the country into deep and inconsolable melancholy.

    Within 17 months of that came the bombshell of a news: the death of Prime Minister Lal Bahadur Shastri in Tashkent on January 10, 1966. It benumbed the nation, particularly the Congress party. Its president K. Kamaraj had in 1964 managed to have Lal Bahadur Shastri elected unanimously as Prime Minister. However, he faced a more difficult situation in choosing a Prime Minister in 1966 as Congress leaders such as Morarji Desai, Jagjivan Ram, Y.B. Chavan and Gulzarilal Nanda (caretaker Prime Minister) were in the fray.

    The Congress Parliamentary Party relied on Kamaraj to find an amicable solution.

    He was keen to have as Prime Minister someone who would be able to lead the Congress party in the general election of 1967. Ultimately, he decided on Indira Gandhi. He was aware that his friends Morarji Desai and other members of the group called Syndicate would not accept Indira Gandhi at any time. However, Kamaraj proceeded intensely to mobilise support for Indira Gandhi by contacting important leaders and Chief Ministers.

    At the Congress Parliamentary Party meeting on January 15, 1966, only Indira Gandhi and Morarji Desai remained as contestants. Mediapersons were waiting anxiously to know whether it was a “girl” or a “boy”. At the end of the counting, the announcement was that it was a “girl”.

    Indira Gandhi was profusely thankful to Kamaraj who was solely responsible for the unforeseen event of her becoming the Prime Minister. In the formation of the Cabinet, Kamaraj insisted that Indira Gandhi retain most of the Ministers of the Shastri government, and she acted accordingly.

    In her biography Indira Gandhi, Pupul Jayakar noted: “She [Indira] needed Kamaraj’s support and therefore she assumed the role of a pupil, agreeing to every move suggested by him” (page 178, Penguin Books).

    Jawaharlal Nehru's only child, Indira Gandhi, took over as India's third prime minister on January 24, 1966, following Shastri's death


    The Controversy after becoming PM

    In the chessboard of politics, a small error in moving a pawn may result in a great defeat because of the well-placed formidable queen piece on the opposite side.

    When Indira Gandhi was appointed Minister for Information and Broadcasting in the Shastri Cabinet, she was not a member of either House of Parliament. She got elected to the Rajya Sabha on August 26, 1964. She retained the position when she became Prime Minister in 1966.

    “Unhealthy conventions”
    H.V. Kamath, a Member of Parliament noted for his acumen for constitutional and parliamentary procedures (as revealed in his active participation in the Constituent Assembly on each and every Draft Article taken for consideration), moved a private member’s Bill in the Lok Sabha for the amendment of Articles 75 and 164 of the Constitution.

    The Bill said thus in the Statement of Objects and Reasons:

    The highest traditions of the parliamentary democracy, with a bicameral set-up, demand that the Council of Ministers at the Centre and in the States, should consist of members who are directly elected by the people and that the Prime or Chief Minister should in no circumstances be a member who has been elected indirectly.

    As Prime Minister Indira Gandhi was not an elected member of the Lok Sabha, the Bill attracted the attention of the media and MPs in the labyrinthine political situation of 1966. Initiating the discussion of the Bill on April 15, 1966, Kamath said:

    India should set an example in this matter of constitutional and parliamentary manners. The Constitution should stipulate categorically that the Prime Minister of the Union should be an elected member of the Lok Sabha…. Of the 16 Ministers of the present Cabinet, seven are from Rajya Sabha and nine from Lok Sabha. No other parliamentary democracy in the world shows such an example with regard to its own Cabinet. I am sorry to point out that one member who had been defeated in the last election had been appointed to the present Cabinet…."

    “The point I am trying to make out is that we are establishing bad traditions, setting up unhealthy conventions, which are antithetical to the principles and spirit of parliamentary democracy and to even the letter of the Constitution.”

    As a large number of members wanted to participate in the debate, Hiren Mukherjee, leader of the Communist Party of India, suggested:

    “The time may be extended. This is a matter of great importance and [the] Prime Minister should have been here. Some Cabinet Minister ought to be here. The government disregards this debate, because they have a majority.”

    Regarding the constitutional conventions of the United Kingdom, Kamath said:

    “In Great Britain, regarding the House of Commons from whom we have borrowed much of our Constitution, no member of the House of Lords has been the Prime Minister since the resignation of Lord Salisbury in 1902…. Is it not a mockery of the spirit and letter if the Cabinet is headed by a person who is not a member of that House to which the Cabinet is collectively responsible? When in 1945, the British government was carrying [on] in full swing the war against Japan after the fall of Germany, still general elections were held in Great Britain. "

    Pointing out the practice in other parliamentary democracies, Kamath said:
    “In Canada, another Commonwealth country, all Ministers in charge of departments of government must be members of the House of Commons…. In Ireland, only the members of the Dail Eireann can be members of the Executive Council…. In Germany, the Federal Chancellor, nominated by the Federal President, must be then elected by the Bundestag, which is the lower House.”

    Prime Minister and Lok Sabha membership

    In conclusion, Kamath remarked that he was not against the Rajya Sabha. He had respect for that House, and his only demand was that the Prime Minister should be an elected member of the Lok Sabha.

    H.N. Mukherjee, CPI leader, said:

    “I cannot understand why the House does not take this matter seriously enough. Government seems to think that this is a matter which being a constitutional amendment has not the foggiest chance of being passed and, therefore, they can make short shrift of it. Here is a matter of principle, as Congress member [Harish Chandra] Mathur has made it clear. Congress members may not agree with all the provisions of the Bill, but the main point is that the Prime Minister must belong to the Lower House…. It is not against any particular Prime Minister. It is based on a principle…. Lal Bahadur [Shastri] is dead and his seat is vacant. Was it not possible for the Prime Minister to contest that seat, which ought to be a very safe seat for a Congress candidate? This kind of thing like the Prime Minister being a member of the representative elected House becomes a categorical imperative. To quote Erskine May: ‘It is the Prime Minister’s duty to express the sense of the House on formal occasions on motions of thanks or congratulations and motions of confidence.’”

    H.N. Mukherjee warned about emerging Chief Ministers who would indulge in the process of choosing Prime Minister:

    “Already there are indications in the country that the Chief Ministers—satraps—Kamath described them as subedars—are becoming too powerful, and if in addition to the power which they have come to enjoy in the Congress set-up—they dominate in the discussions to decide who is to be the Prime Minister..., then, Sir, where is parliamentary democracy leading us to?”

    As more members wanted to participate in the discussion, the House adopted a motion extending its time.

    Yashpal Singh (Independent) and Viswanath Pandey (Congress) moved amendments to the Bill seeking circulation of the Bill for public opinion. Kamath welcomed the idea.

    Harish Chandra Mathur, a senior Congress leader in the Constituent Assembly and also a member of the Rajya Sabha (1952-56) and the second and third Lok Sabhas, spoke:

    “As far as the basic principle of the Bill is concerned, I think there can be no two opinions and it will have my full support…. So far as the Prime Minister is considered, it is the first time that we are faced with a difficult situation…. I feel that the only correct thing could have been for the Prime Minister, even before taking the oath before the President, to have resigned from that House. Without being a member of any House, she could be the Prime Minister for six months and then the election should have followed…. But it is very significant and important that the government and the Prime Minister make a policy decision that they subscribe to this particular view.

    “You are probably aware that the late Prime Minister Jawaharlal Nehru had made [it] abundantly clear to all the Cabinet Ministers from the other House that if they were to continue in the Cabinet after the elections, they must contest the elections and come to this House. I think at present, all that is necessary is a clear enunciation of that policy and a commitment by the government.”

    The Bill evoked 32 members of the House to participate in its consideration—19 from the Congress party and 13 from the opposition. All but one of the Congress members participating in the discussion supported the Bill in principle but wanted to develop it by convention.

    Speaking on April 29, 1966, on behalf of the government, Jaisukhlal Hathi, Minister of State for Home, said:

    “I may say at once that so far as the government and the party and all of us are concerned, those who believe in democracy, in parliamentary method, there can be no doubt in principle that the Prime Minister should be normally a member elected to Lok Sabha.”

    Further he stated:

    “Therefore it is a question of having conventions, and nobody would deny that we should set up healthy conventions and such conventions as have force more than any law, more than any written law.”

    Hathi lastly observed:

    “While the spirit behind the Bill is acceptable, it would not be proper to have such a provision in the Constitution. There may be occasions—that too for a limited period—[when] a Prime Minister has to be from the other House.”

    The House was adjourned on that day (April 29, 1966). At the next session of the private members’ business on May 13, 1966, the voting was to be taken as per the Rules of Procedure in respect of a Constitution Amendment Bill. As the government opposed the amendment Bill, the Bill was negatived when the division was taken.

    Indira Gandhi successfully contested the 1967 election to be a member of the Lok Sabha and attended the Lok Sabha on March 7, 1967, as the Leader of the House.

    The Leader of the House is an important functionary directly and immediately responsible for issues in that House to which the Cabinet is solely accountable.

    The early hurdle of her Prime Minister ship is now officially cleared..
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  3. Maarkhoor

    Maarkhoor ELITE MEMBER

    Aug 24, 2015
    +51 / 25,258 / -8
    Well written article but like to correct few facts and please don't use conspiracy theory sources for your articles
    Giving you one example Feroz Ghandhi was not a Muslim but a well know Parsi. But for some time RSS and BJP trying to prove through malicious campaign that Mrs. Gandhi was Muslim for political gains. By the way you haven't mention sources.

    Feroze Gandhi
    Feroze Gandhi (born Feroze Jehangir Ghandy;[3] 12 September 1912 – 8 September 1960) was an Indian politician and journalist. He served as the publisher of the The National Herald and The Navjivan newspapers fromLucknow. He was the husband of Indira Gandhi and the son-in-law toJawaharlal Nehru.
    Early life
    Feroze Jehangir Ghandy was born to a Parsi family at the Tehmulji Nariman Hospital situated in Fort, Bombay. His parents, Faredoon Jehangir and Ratimai (formerly Ratimai Commissariat), lived in Nauroji Natakwala Bhawan in Khetwadi Mohalla in Bombay.[6] His father Jehangir Ghandy was a Marine Engineer in Killick Nixon and was later promoted as a Warrant Engineer.[7]Feroze was the youngest of the five children with two brothers Dorab Gandhi and Faridun Jehangir Gandhi,[8][9] and two sisters, Tehmina Kershashp Gandhi and Aloo Gandhi Dastur.[10] The family had migrated to Bombay from Bharuchin South Gujarat where their ancestral home, which belonged to his grandfather, still exists in Kotpariwad
    Feroze Gandhi - Wikipedia, the free encyclopedia

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    Jan 5, 2014
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    Thank you bro, but as you pointed out the same was already written in the article just beneath the same part where i talked about Feroze being Muslim.. See here

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  5. Maarkhoor

    Maarkhoor ELITE MEMBER

    Aug 24, 2015
    +51 / 25,258 / -8
    This is not a story but fact that he was a Parsi but time to time BJP and RSS raise this issue just for political reason, He was quite popular man in India at that time he can't hide his real identity of being a Muslim. He was Parsi from father side and mother was also a converted Parsi.
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    Jan 5, 2014
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    First Period as Prime Minister : The start of the burning train...
    • On Shastri’s sudden death in January 1966, Gandhi was named leader of the Congress Party—and thus also became prime minister—in a compromise between the party’s right and left wings.
    • Her leadership, however, came under continual challenge from the right wing of the party, led by former minister of finance Morarji Desai.
    • She won a seat in the 1967 elections to the Lok Sabha (lower chamber of the Indian parliament), but the Congress Party managed to win only a slim majority of seats, and Gandhi had to accept Desai as deputy prime minister.
    But the general elections of 1967 had Congress showing poor results. Following this Indira Gandhi started progressively moving to the left in the political spectrum.

    The major policies of Indira Gandhi in her first stint as PM are
    • Proposals for the abolition of Privy Purse to former rulers of the Princely states
    • Rupee Devaluation of 1966
    • Indian Green Revolution
    • The 1969 nationalization of the fourteen largest banks in India
    Rupee Devaluation of 1966

    Prime Minister Indira Gandhi’s move became very unpopular
    • On June 6, 1966, in one fell swoop, the Indira Gandhi government devalued the Indian rupee by 57 percent, from Rs 4.76 to Rs 7.50 to a dollar, triggering bitter criticism in the Parliament and media.
    • The people, too, joined in claiming that this was the ultimate “sell-out to America and the World Bank”.
    The move, however, was in the offing for some time.
    • Since Independence, India had held the dollar constant at Rs 4.76 in spite of increased trade deficits and a reliance on foreign aid to maintain a constant valuation.
    • The final straw was the wars India fought (with China and Pakistan) and the shock of a major drought in 1965-1966.
    • Each instance increased deficit spending, further accelerating the already severe inflation. Besides, the World Bank, largely funded by the US, fell short of its promised aid inflows to India.
    Even though PM Indira Gandhi took all the flak for the move, her predecessor Lal Bahadur Shastri (who died of a cardiac arrest during his trip to Tashkent in early 1966) had set the stage for it. According to former diplomat BK Nehru’s account (in his book Nice Guys Finish Second), Shastri is also said to have “eased out” his finance minister the previous year for opposing this devaluation.

    The Indian government took the step to counter soaring inflation, but it turned out to be very unpopular and laid the foundation for distrust between the people and the government. The devaluation had its ramifications abroad as well; Oman, Qatar and the UAE, countries which used the Gulf Rupee (issued by the RBI), were forced to come up with their own currencies.

    Nationalization of 14 Banks
    Indira Gandhi’s decision to go ahead with the nationalization of banks helped her gain support. Here, the former PM is seen during a Congress parliamentary party meeting in New Delhi on July 17, 1969
    • It was politics that trumped economics in 1969 when Prime Minister Indira Gandhi nationalised 14 banks.
    • She had been under pressure from older, more experienced hands within the party (known as the Syndicate) who wanted banks to be nationalized to neutralize them.
    • Their argument was that the banking sector was not working rapidly enough in spreading credit availability across the country.
    Nationalizing banks had become the rallying point for a lot of agitations and giving in to the demand allowed Indira Gandhi to strengthen support. Yet, the speed with which the nationalisation of banks took place surprised many.

    Morarji Desai, who was finance minister then, remained adamant and refused to go ahead with the proposal. “Recent experience does not suggest that large banks need to be taken over so as to do something they have not been doing,” he wrote.

    However, on July 19, 1969, the Banking Companies (Acquisition and Transfer of Undertakings) Ordinance resulted in the ownership of 14 banks being transferred to the state. This made Desai’s position in the cabinet untenable. Indira Gandhi, however, offered that he could stay on as deputy prime minister, but Desai declined (it was later called a political masterstroke). The 14 banks controlled 70 percent of the country’s deposits.
    • While there is no doubt that the nationalization of banks led to credit being channelized to agriculture and small and medium industries, the Act also resulted in a lot of delegated legislation.
    • Banks had to reserve as much as 40 percent of credit to the priority sectors (agriculture and small and medium industries).
    There was an apprehension that by bringing all the credit powers within government controlled entity essentially the whole economy is being controlled by the political party in power. This created a fear that anybody not toeing with the directions of Congress would not get any assistance for their industries or businesses.

    Indian Green Revolution
    • In the 1960s, the Green Revolution allowed less developed countries, such as India, to overcome chronic food deficits.
    • Basically, the Green Revolution stands for producing more food and other agricultural products from less land.
    • Modernization is one of the main concepts in the Green Revolution.
    • The practices were made up of using high-yielding varieties of seeds, modifying farm equipment, and substantially increasing chemical fertilizers. This allowed growth and sustainability.
    • Before the Green Revolution was introduced prior to the 1960s, farmer’s main goal was to produce wheat and rice.
    • These varieties had a low yield per hectare, which means that these crops took one year to produce and in order for farmers to increase production, there would have to be a change.
    • The change would have to consist of irrigation facilities, fertilizers, and pesticides.
    • In order for these changes to work properly, there would have to be a sufficient quantity of water and fertilizers.
    • At the beginning, many farmers thought if they could double their production of crops in one season, that they would do whatever they could do increase crop production.
    • Improving high yielding varieties of wheat was a major factor, which finally led to the Green Revolution.
    The introduction of high-yielding varieties of seeds and the increased use of chemical fertilizers provided the agriculture industry in India an increase in production. The Green Revolution was thought to pave the way for rapid industrial growth, but in the end it did exactly the opposite. It created a shortage.

    At the time, when the Green Revolution first began, it was considered one of the most significant technological achievements in the agricultural industry. The Green Revolution dramatically increased global food production over the next two decades, particularly in India.

    The increase production of wheat fueled a self sufficiency of food for India. The high yielding seeds and irrigation facilities, brought enthusiasm to many farmers in India. By seeing better profits from the Green Revolution, the farmers
    began to enjoy life more with better earnings,knowing that they had the ability to provide for their family.

    Unfortunately, with the rise in use of chemical pesticides and fertilizers, there were many negative effects on the soil and land.

    Despite the early benefits, it became apparent that there were many negative impacts from the green revolution. After the Green Revolution began in India, there was a change in the land use patterns, known as the degradation of land.
    Whereas primarily there were only one crop planted per year, before the Green Revolution. There were two to three crop rotations every year, the land quality diminished and the land quality had suffered. Due to the impute of heavy
    chemical fertilizers, a strain on the carbon material within the soils were created. There also has been a loss in bio diversity in farm lands because since there has been an increase in chemical pesticides and fertilizers, many insects have been killed and the birds that create homes in rural areas have found new areas to live because of the negative side effects that the pesticides give off to the environment.

    As a result of chemical use in the land, contamination of ground water affected the health of the people who are consuming the agricultural goods that now contained pesticides and chemicals. This directly affected the health of
    Indians,who were not used to putting such chemicals in their bodies.

    Critics believe that
    • the Green Revolution resulted in environmental degradation,
    • increased income inequality,
    • inequitable asset distribution,
    • and worsened poverty levels in India.
    The majority of the large farmers were able to adapt to the new technologies because they had better irrigation, fertilizers, and seeds. However, the Green Revolution affected just as many of the smaller farmers during the Green Revolution. It is believed that the Green Revolution encouraged mechanization, which pushed down rural wages and employment, and increasingly impoverished small farmers.

    When the Green Revolution occurred, there was a spread only in irrigated and high-potential rainfed areas, which created many villages without sufficient water. Even though there were more employment opportunities and cheaper
    food, not having a sufficient amount of water in a village is crucial for survival. There was some retreating of water from natural watersheds; this was replenishing water, which was pumped from areas that can be quickly replenished by the rainwater, however, there was not a sufficient amount of water for survival.

    Political Controversy and going into 1971 Elections
    • No sooner the issues of her becoming PM via Rajya Sabha Seat was solved by her election to the Lok Sabha, another new issue came to the fore front.
    • Due to ongoing tensions between Indira Gandhi and Moraji Desai the party was divided among the two main groups. But in 1969 she was expelled from it by Moraji Desai and other members of the old guard.
    • In 1969, after falling out with senior party leaders on a number of issues, the party president S. Nijalingappa expelled her from the party
    • Undaunted, Gandhi, joined by a majority of party members, formed a new faction around her called the “New” Congress Party.
    • Gandhi's faction of the Congress party managed to retain most of the Congress MPs on her side with only 65 on the side of Congress (O) faction

    The internal structure of the Congress Party had withered following its numerous splits, leaving it entirely dependent on her leadership for its election fortunes.

    Garibi Hatao (Eradicate Poverty) was the theme for Gandhi's 1971 bid. On the other hand, the combined opposition alliance had a two word manifesto of "Indira Hatao" (Remove Indira).

    The Garibi Hatao slogan and the proposed anti-poverty programs that came with it were designed to give Gandhi an independent national support, based on rural and urban poor. This would allow her to bypass the dominant rural castes both in and of state and local governments; likewise the urban commercial class. And, for their part, the previously voiceless poor would at last gain both political worth and political weight.

    The programs created through Garibi Hatao, though carried out locally, were funded and developed by the Central Government in New Delhi. The program was supervised and staffed by the Indian National Congress party. "These programs also provided the central political leadership with new and vast patronage resources to be disbursed... throughout the country."

    In the 1971 Lok Sabha elections the New Congress group won a sweeping electoral victory over a coalition of conservative parties.


    Indira Gandhi campaigning before national parliamentary elections in India, spring 1971

    Second Period as Prime Minister

    In the 1971 Lok Sabha elections the New Congress group won a sweeping electoral victory over a coalition of conservative parties.
    Gandhi chiefly did the following in this tenure
    • In her foreign policy, Gandhi remained nonaligned, wavering between support of the United States and USSR.
    • India established itself as a formidable military power under her rule, defeating Pakistan in an 11-month-war in 1971
    • India did its first Nuclear test in 1974 and announced to the world about having a nuclear weapon
    Creation of Bangladesh
    Gandhi strongly supported East Pakistan (now Bangladesh) in its secessionist conflict with Pakistan in late 1971, and India’s armed forces achieved a swift and decisive victory over Pakistan that led to the creation of Bangladesh. She became the first government leader to recognize the new country.

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    Jan 5, 2014
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    Fourth Five Year Plan (1969–1974)
    • At this time Indira Gandhi was the Prime Minister.
    • The Indira Gandhi government nationalized 14 major Indian banks and the Green Revolution in India advanced agriculture.
    • In addition, the situation in East Pakistan (now Bangladesh) was becoming dire as the Indo-Pakistan War of 1971 and Bangladesh Liberation War took funds earmarked for industrial development.
    • India also performed the Smiling Buddha underground nuclear test in 1974, partially in response to the United States deployment of the Seventh Fleet in the Bay of Bengal.
    • The fleet had been deployed to warn India against attacking West Pakistan and extending the war.
    • The target growth rate was 5.6%, but the actual growth rate was 3.3%

    Diplomatic Success
    Following the Indo-Pakistani War of 1971, Gandhi invited the Pakistani president to Shimla for a week long summit.

    Pakistani leader Zulfikar Ali Bhutto stands with Indian Prime Minister Indira Gandhi before a summit in Simla, India, on June 28, 1972.

    Zulfikar Ali Bhutto with Indira Gandhi in Shimla

    The two leaders eventually signed the Shimla Agreement, agreeing to resolve the dispute of Kashmir by peaceful means.

    New Problems

    Despite the triple victory of elections, Indo-Pak war/Bangladesh creation and building a Nuclear Bomb, still Indira Gandhi face multitude of problems..

    First Problem - 1973 Oil Crisis

    • The 1973 oil crisis began in October 1973 when the members of the Organization of Arab Petroleum Exporting Countries (OAPEC, consisting of the Arab members of OPEC plus Egypt and Syria) proclaimed an oil embargo.
    • By the end of the embargo in March 1974, the price of oil had risen from $3 per barrel to nearly $12 globally; US prices were significantly higher.

    The end of World War II brought about a phenomenal increase in the demand for oil and consequently production of crude oil in the Middle East increased bringing large revenues to the producing countries. This, however, highlighted not only the importance of oil for these governments, but also emphasised the dependence of these economies on oil revenues. Along with this realisation came the resentment of the lack of control these producing countries had on their oil industries, and when the oil majors unilaterally refused to increase oil prices in 1959 and again in 1960, first the oil producers succeeded in creating OPEC, which provided them the opportunity to wrest more power from the oil majors over pricing and production and then, over time, nationalising their oil industries.I

    However, it was not till the onset of the Yom Kippur War in 1973, and the successful use of oil as a political weapon that the Arabs fully realised the power they wielded through OPEC. While the outbreak of the war caused a drop of around one million barrels of oil per day (mb/d) in supplies because of the closure of pipelines from Iraq and Saudi Arabia to the eastern Mediterranean coast to minimise loss on account of possible damage to pipelines, it was Iraq which first used oil as a political tool.

    On October 7, 1973, it nationalised two American companies—Exxon and Mobil—as well as the Dutch affiliate of British Petroleum Company to punish Holland's "flagrantly hostile attitude, and its support for the Zionist enemy." Soon after, the decision to cut production incrementally by 5 per cent per month was taken until Israel withdrew from occupied Arab lands and the rights of the Palestinians were restored.

    But in hindsight, it was the eventual hike in the price of oil which caused more damage to the international market and global economy than the production cuts. On October 16, OPEC decided to increase the posted prices of oil by 70 per cent after negotiations with international oil companies failed. OPEC announced that the cost of oil to the producing companies would no longer be a matter for negotiation but would be set by market prices. A week later, they announced a further hike of 130 per cent.

    According to some analysts, the price rise was "the Arabs' essay into economic warfare", and warned that "under these conditions rapacious governments would soon find an excuse to impose fresh restrictions on production so as to recreate the state of artificial shortage which is so profitable to them….. Consumers of oil must accept the fact that OPEC has now evolved into what is probably the toughest cartel the world has ever known, with the power to restrict supplies and hold the consumer to ransom."

    Effect of the Oil Crisis

    Though there is no disputing the fact that the industrialized West was affected by the oil crisis in that other than having a negative fallout on their economies and leaving a lasting impression on future economic, business and political practice, the oil embargo did not achieve the goal (either the short or long-term) which the Arabs had hoped for. While the demands regarding Palestine and Israel remained unfulfilled, the initial success of raising the oil price and the huge revenues that it created for the producers were soon offset by the cracks that appeared in OPEC's set up.

    And though the embargo imposed on the US remained in place till March and the Netherlands till July 1974, the Arabs soon realized that they were losing politically and economically, and lifted the embargo. However, OPEC did manage to earn a formidable reputation.

    Among the industrialized countries, Japan was probably the hardest hit by the oil crisis. In 1972, Japan imported some 87 per cent of its oil, 80 per cent of which came from the Middle East. Since Japan had not done anything to cultivate special relations with the Arabs, it was not granted any favored treatment, prompting its then Minister of Trade, Yasuhiro Nakasone to say that a lack of oil supplies could "Provoke a civil war in Japan such as that triggered by rice hoarding in the past" as "Oil is blood to industries in Japan." In fact, the outgo of foreign exchange for its oil imports saw its reserves come down from $19 billion to $13 billion in one year, and threatened to be washed away completely in a few months.

    However, it was the developing countries, which were the main victims of the oil price hike. Initially, the developing countries heralded the OAPEC decision as a new dawn in world politics, and the oil crunch took on the colours of a battle between the South versus the North. But as the Arab states made it clear that they would under no circumstances follow a dual pricing policy in favour of these countries, it was the developing world which suffered far more than the industrialized nations. For while the huge price hike forced them to pay out more for their oil imports, the cut in non-oil imports resorted to by the industrialized countries, most of whom were the developing world's biggest customers, also hurt their economies. According to a World Bank study, the increase in the oil import bill for the developing countries in 1974 was around $4,500 million.

    When the crisis began, India, like many other developing countries which enjoyed friendly relations with the Arab states, had hoped that it would be given favourable treatment. However, OPEC expressed its inability to adopt a dual pricing system. In 1973 India's oil import bill was to the tune of around $414 million, and it was projected to go up to around $1,350 million in 1974 because of the price hike. This was around 40 per cent of its potential export earnings, and twice the amount of its existing foreign exchange reserves.

    According to estimates made at the time, the oil revenues of the Gulf states—Saudi Arabia, Kuwait, Libya, Iran and Iraq—in 1974 quadrupled from around $13 billion in 1972 to around $52 billion. Hence the oil weapon gave the oil producers enormous access to wealth at the time as well as financial clout.

    Second Problem : Triggers at home
    The 1973 saw multiple problems cropping up associated with the Oil problem. Chiefly among them is
    • Delhi and north India were rocked by demonstrations angry at high inflation
    • Poor state of the economy,
    • Rampant corruption, and
    • The poor standards of living.
    Two more triggers were
    • In 1973, her government enacted the Monopolies & Restrictive Trade Practices Act which basically crippled the private sector. No private company could indulge in any meaningful economic or entrepreneurial activity without prior approval from the government.
    • Mrs. Gandhi gifted draconian law to the private sector in 1973, the Foreign Exchange Violations Act which effectively barred Indian citizens from holding any foreign currency.
    Together, MRTP and FERA not only crippled the private sector, but also gave birth to a system riddled with corruption. That corrupt system still harasses ordinary citizens and hobbles economic activity.

    Of course, while doing all this, Mrs. Gandhi also implemented a policy that made corporate donations to political parties illegal.

    So enamored was Mrs. Gandhi by the power of the State that she even attempted to nationalize the food grains trade in 1973. Mercifully, this experiment with socialism was short lived because its disastrous consequences became immediately visible.

    Fifth Five Year Plan (1974–1978)
    • The Fifth Five-Year Plan laid stress on employment, poverty alleviation (Garibi Hatao), and justice.
    • The plan also focused on self-reliance in agricultural production and defence.
    • The Electricity Supply Act was amended in 1975, which enabled the central government to enter into power generation and transmission.
    • The Indian national highway system was introduced and many roads were widened to accommodate the increasing traffic.
    • Tourism also expanded.
    • The target growth rate was 4.4% and the actual growth rate was 5%
    Controversy after Controversy - The Burning train continues

    • In March 1972, Gandhi led her New Congress Party group to landslide victories in a large number of elections to state legislative assemblies.
    • Shortly afterward, however, her defeated Socialist Party opponent from the 1971 national election charged that she had violated the election laws in that contest.
    • In June 1975 the High Court of Allahabad ruled against her, which meant that she would be deprived of her seat in the parliament and would be required to stay out of politics for six years.
    • She appealed the ruling to the Supreme Court but did not receive a satisfactory response.
    • Taking matters into her own hands, she declared a state of emergency throughout India, imprisoned her political opponents, and assumed emergency powers.
    • Many new laws were enacted that limited personal freedoms.
    • During that period she also implemented several unpopular policies, including large-scale sterilization as a form of birth control.
    Verdict on electoral malpractice
    • On 12 June 1975 the High Court of Allahabad declared Indira Gandhi's election to the Lok Sabha void on grounds of electoral malpractice.
    • In an election petition filed by Raj Narain (who later on defeated her in 1977 parliamentary election from Rae Bareily), he had alleged several major as well as minor instances of using government resources for campaigning.
    • The court thus ordered her stripped of her parliamentary seat and banned from running for any office for six years.
    • The Prime Minister must be a member of either the Lok Sabha (the lower house in the Parliament of India) or the Rajya Sabha (the upper house). Thus, this decision effectively removed her from office.
    • Gandhi had asked one of her colleagues in government, Mr Ashoke Kumar Sen to defend her in court.
    But Gandhi rejected calls to resign and announced plans to appeal to the Supreme Court. The verdict was delivered by Mr Justice Jagmohanlal Sinha at Allahabad High Court. It came almost four years after the case was brought by Raj Narain, the premier's defeated opponent in the 1971 parliamentary election. Gandhi, who gave evidence in her defence during the trial, was found guilty of
    • dishonest election practices,
    • excessive election expenditure, and
    • of using government machinery and officials for party purposes.
    The judge, however, rejected more serious charges of bribery against her.

    Gandhi insisted that the conviction did not undermine her position, despite having been unseated from the lower house of parliament, Lok Sabha, by order of the High Court. She said: "There is a lot of talk about our government not being clean, but from our experience the situation was very much worse when [opposition] parties were forming governments".

    And she dismissed criticism of the way her Congress Party raised election campaign money, saying all parties used the same methods. The prime minister retained the support of her party, which issued a statement backing her. After news of the verdict spread, hundreds of supporters demonstrated outside her house, pledging their loyalty. Indian High Commissioner BK Nehru said Gandhi's conviction would not harm her political career. "Mrs Gandhi has still today overwhelming support in the country," he said. "I believe the prime minister of India will continue in office until the electorate of India decides otherwise".


    Instead of resigning as expected, she responded by declaring a state of emergency on 25.06.1975- 21.03.1977, whereby citizens’ civil liberties were suspended, the press was acutely censored and the majority of her opposition was detained without trial. Throughout what became referred to as the “Reign of Terror,” thousands of dissidents were imprisoned without due process.

    Gandhi moved to restore order by ordering the arrest of most of the opposition participating in the unrest. Her Cabinet and government then recommended that President Fakhruddin Ali Ahmed declare a state of emergency because of the disorder and lawlessness following the Allahabad High Court decision. Accordingly, Ahmed declared a State of Emergency caused by internal disorder, based on the provisions of Article 352(1) of the Constitution, on 25 June 1975.
    In short,
    • Mrs. Gandhi's response was to declare a state of emergency
    • Her political foes were imprisoned,
    • Constitutional rights abrogated, and
    • The press placed under strict censorship.

    Meanwhile, the younger of her two sons, Sanjay Gandhi, started to run the country as though it were his personal fiefdom, and earned the fierce hatred of many whom his policies had victimized. The Emergency saw the entry of Gandhi's younger son, Sanjay, into Indian Politics. Sanjay wielded tremendous power during the emergency without holding any Government office.

    According to Mark Tully, "His inexperience did not stop him from using the Draconian powers his mother, Indira Gandhi, had taken to terrorise the administration, setting up what was in effect a police state."

    • It was said that during the Emergency he virtually ran India along with his friends, especially Bansi Lal.
    • It was also quipped that Sanjay Gandhi had total control over his mother and that the government was run by the PMH (Prime Minister House) rather than the PMO (Prime Minister Office)
    • He ordered the removal of slum dwellings, and in an attempt to curb India's growing population, initiated a highly resented program of forced sterilization.
    Fall from power and return to office

    • Public opposition to Gandhi’s two years of emergency rule was vehement and widespread, and after it ended in early 1977, the released political rivals were determined to oust her and the New Congress Party from power.
    • When long-postponed national parliamentary elections were held later in 1977, she and her party were soundly defeated, whereupon she left office.
    • The Janata Party (precursor to the Bharatiya Janata Party) took over the reins of government, with newly recruited member Desai as prime minister.
    • In early 1978 Gandhi and her supporters completed the split from the Congress Party by forming the Congress (I) Party—the “I” signifying Indira.
    • She was briefly imprisoned (October 1977 and December 1978) on charges of official corruption.
    • Despite those setbacks, she won a new seat in the Lok Sabha in November 1978, and her Congress (I) Party began to gather strength.
    • Dissension within the ruling Janata Party led to the fall of its government in August 1979.
    • When new elections for the Lok Sabha were held in January 1980, Gandhi and Congress (I) were swept back into power in a landslide victory.
    • Her son Sanjay, who had become her chief political adviser, also won a seat in the Lok Sabha. All legal cases against Indira, as well as against Sanjay, were withdrawn.
    Sanjay Gandhi’s death in an airplane crash in June 1980 eliminated Indira’s chosen successor from the political leadership of India.

    After Sanjay’s death, Indira groomed her other son, Rajiv, for the leadership of her party. She adhered to the quasi-socialist policies of industrial development that had been begun by her father. She established closer relations with the Soviet Union, depending on that country for support in India’s long-standing conflict with Pakistan.

    Rolling Plan in place of Five Year Plan (1978–1980)
    • The Janata Party government rejected the Fifth Five-Year Plan and introduced a new Sixth Five-Year Plan (1978–1980).
    • This plan was again rejected by the Indian National Congress government in 1980 and a new Sixth Plan was made.
    • The Rolling Plan consists of three kind of plans that were proposed.
      • The First Plan is for the present year which comprises the annual budget and Second is a plan for a fixed number of years, which may be 3, 4 or 5 years.
      • Plan number two is kept changing as per the requirements of the Indian economy.
      • The Third Plan is a perspective plan which is for long terms i.e. for 10, 15 or 20 years. Hence there is no fixation of dates in for the commencement and termination of the plan in the rolling plans.
    • The main advantage of the rolling plans is that they are flexible and are able to overcome the rigidity of fixed five year plans by mending targets,the object of the exercise, projections and allocations as per the changing conditions in the country’s economy.
    • The main disadvantage of this plan is that if the targets are revised each year, it becomes very difficult to achieve them which are laid down in the five-year period and it turned out to be a complex plan.
    • Frequent revisions make them resulted in instability of the economy which are essential for its balanced development and progress.

    Sixth Five Year Plan (1980–1985)
    • The Sixth Five-Year Plan marked the beginning of economic liberalization.
    • Price controls were eliminated and ration shops were closed.
    • This led to an increase in food prices and an increase in the cost of living.
    • This was the end of Nehruvian socialism.
    • The National Bank for Agriculture and Rural Development was established for development of rural areas on 12 July 1982 by recommendation of the Shivaraman Committee.
    • Family planning was also expanded in order to prevent overpopulation.
    • In contrast to China's strict and binding one-child policy, Indian policy did not rely on the threat of force
    • More prosperous areas of India adopted family planning more rapidly than less prosperous areas, which continued to have a high birth rate.
    • The Sixth Five-Year Plan was a great success to the Indian economy.
    • The target growth rate was 5.2% and the actual growth rate was 5.4%. T

    The End Years

    • In the second, post-Emergency, period of her Prime Ministership, Indira Gandhi was preoccupied by efforts to resolve the political problems in the state of Punjab.
    • During the early 1980s Indira Gandhi was faced with threats to the political integrity of India.
    • Several states sought a larger measure of independence from the central government, and Sikh separatists in Punjab state used violence to assert their demands for an autonomous state.
    • In 1982 a large number of Sikhs, led by Sant Jarnail Singh Bhindranwale, occupied and fortified the Harmandir Sahib (Golden Temple) complex at Amritsar, the Sikhs’ holiest shrine.
    • Tensions between the government and the Sikhs escalated, and in June 1984 Gandhi ordered the Indian army to attack and oust the separatists from the complex.
    • "Operation Bluestar", waged in June 1984, led to the death of Bindranwale, and the Golden Temple was stripped clean of Sikh terrorists; however, the Golden Temple was damaged, and Mrs. Gandhi earned the undying hatred of Sikhs who bitterly resented the desacralization of their sacred space.
    The day before her death (30 October 1984) Indira Gandhi visited Orissa where she gave her last speech:
    I am alive today, I may not be there tomorrow...I shall continue to serve until my last breath and when I die, I can say, that every drop of my blood will invigorate India and strengthen it

    On 31 October 1984, two of Gandhi's bodyguards, Satwant Singh and Beant Singh, shot her with their service weapons in the garden of the Prime Minister's residence at 1 Safdarjung Road, New Delhi. The shooting occurred as she was walking past a wicket gate guarded by Satwant and Beant. She was to have been interviewed by the British actor Peter Ustinov, who was filming a documentary for Irish television. Beant Singh shot her three times using his side-arm and Satwant Singh fired 30 rounds. Beant Singh and Satwant Singh dropped their weapons and surrendered. Afterwards they were taken away by other guards into a closed room where Beant Singh was shot dead. Kehar Singh was later arrested for conspiracy in the attack. Both Satwant and Kehar were sentenced to death and hanged in Delhi's Tihar Jail.

    Indira Gandhi was brought at 9:30 AM to the All India Institute of Medical Sciences where doctors operated on her. She was declared dead at 2:20 PM. The post-mortem examination was conducted by a team of doctors headed by Dr. T.D. Dogra. Dr. Dogra stated that as many as 30 bullet wounds were sustained by Indira Gandhi, from two sources, a Sten gun and a pistol. The assailants had fired 31 bullets at her, of which 30 had hit; 23 had passed through her body while 7 were trapped inside her. Dr. Dogra extracted bullets to establish the identity of the weapons and to match each weapon with the bullets recovered by ballistic examination. The bullets were matched with respective weapons at CFSL Delhi. Subsequently Dr. Dogra appeared in the court of Shri Mahesh Chandra as an expert witness (PW-5), and his testimony lasted several sessions. The cross examination was conducted by Shri P. N. Lekhi, the defence counsel.Salma Sultan gave the first news of assassination of Indira Gandhi on Doordarshan's evening news on 31 October 1984, more than 10 hours after she was shot.

    She died two weeks and five days before her 67th birthday.

    Rahul,, Rajiv, Sonia and Priyanka Gandhi at Indira Gandhi's funeral in Delhi

    Gandhi was cremated on 3 November near Raj Ghat. The site where she was cremated is today known as Shakti Sthala. Her funeral was televised live on domestic and international stations, including the BBC. Following her cremation, millions of Sikhs were displaced and nearly three thousand were killed in anti-Sikh riots.
    Rajiv Gandhi on a live TV show said of the carnage, "When a big tree falls, the earth shakes."

    Final Words

    • Mrs. Gandhi acquired a formidable international reputation as a "statesman", and there is no doubt that she was extraordinarily skilled in politics.
    • She was prone, like many other politicians, to thrive on slogans, and one -- Garibi Hatao, "Remove Poverty" -- became the rallying cry for one of her election campaigns.
    • She had an authoritarian streak, and though a cultured woman, rarely tolerated dissent; and
    • she did, in many respects, irreparable harm to Indian democracy.
    • Apart from her infamous imposition of the internal emergency, the use of the army to resolve internal disputes greatly increased in her time; and she encouraged a culture of sycophancy and nepotism.
    • At her death, her older son, Rajiv Gandhi, was sworn in as head of the Congress party and Prime Minister.

    A quick review of Indian economy during Indira Gandhi's rule
    • Gandhi presided over three Five-Year plans as Prime Minister,two of which succeeded in meeting the targeted growth.
    • Gandhi was accused of formulating populist policies to suit her political needs; being seemingly against the rich and big business while preserving the status quo in order to manipulate the support of the left at times of political insecurity, such as the late 1960s.
    Operation Forward and the Sixth Five Year Plan
    • Gandhi inherited a weak economy when she again became Prime Minister in 1980.
    • The preceding year in 1979–80 under the Janata Party government had led to the strongest recession (−5.2%) in the history of modern India with inflation rampant at 18.2%.
    • Gandhi proceeded to abrogate the Janata Party government's Five Year Plan in 1980 and launched the Sixth Five Year Plan (1980–85).
    • The government targeted an average growth of 5.2% over the period of the plan.
    • Measures to check the inflation were also taken; by the early 1980s inflation was under control at an annual rate of about 5%.
    • Although Gandhi continued professing socialist beliefs, the Sixth Five Year Plan was markedly different from the years of Garibi Hatao.
    • Populist programs and policies were replaced by pragmatism.
    • There was an emphasis on tightening public expenditures, greater efficiency of the State Owned Enterprises (SOE), which Gandhi qualified as a "sad thing", and in stimulating the private sector through deregulation and liberation of the capital market.
    • The government subsequently launched Operation Forward in 1982, the first cautious attempt at reform.
    • The Sixth Plan went on to become the most successful of the Five Year plans yet; showing an average growth of 5.4% over 1980–85.

    Inflation and unemployment

    The price of oil during the 1970s energy crisis.

    • The graph shows sharp increases in 1973 and again in 1979
    • During Lal Bahadur Shastri's last full year in office (1965), inflation averaged 7.7%, compared to 5.2% at the end of Gandhi's first stint in office (1977).
    • On average, inflation in India had remained below 7% through the 1950s and 1960s.
    • But, it then accelerated sharply in the 1970s, from 5.5% in 1970–71 to over 20% by 1973–74, due to the international oil crisis.
    • Gandhi declared inflation the gravest of problems in 1974 (at 25.2%) and devised a severe anti-inflation program.
    • The government was successful in bringing down inflation during the emergency; achieving negative figures of −1.1% by the end of 1975–76.
    • Gandhi inherited a tattered economy in her second term; harvest failures and a second oil shock in the late 1970s had again caused inflation to rise.
    • During Charan Singh's last year in office (1980), inflation averaged 18.2%, compared to 6.5% during Gandhi's last year in office (1984).
    • General economic recovery under Gandhi led to an average inflation at 6.5% from 1981–82 to 1985–86; the lowest since the beginning of India's inflation problems in the 1960s.
    • Unemployment stayed constant at 9% over a nine-year period (1971–80) before declining to 8.3% in 1983

    This brings us to the close of Part 2



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  8. Desertfalcon

    Desertfalcon PROFESSIONAL

    Jun 14, 2009
    +10 / 3,100 / -0
    United States
    United States
    Very interesting read. I took my time with my morning coffee and went through it carefully. Thank you! :enjoy:
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  9. anant_s

    anant_s SENIOR MEMBER

    Aug 21, 2012
    +92 / 16,534 / -0
    These were watershed years for the economy in many ways. Indira had tightened her grip on politics and there was little challenge to her position either from within or outside party and that led to several decisions she took. In many ways India was departing from Nehruvian politics and first generation born after independence was making its presence felt. this generation had not seen or felt what it was like to be living in a foreign colonial rule and had the benefit of a very different education system.
    Unfortunately with rise in inflation, unemployment and corruption they were a disgruntled lot and in my mind this is where they started to probably be critical of socialist utopian system that Pandit Nehru perceived.
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    Jan 5, 2014
    +185 / 16,737 / -0
    I can tell you the Nehru era was far less controversial in economics and politics both ways..

    My family Grand mother whose now closer to 90 years says Nehru was obsessed with building grand things which can be seen from the distance.. Its like saying look thats what Nehru did for our country looking at those giant things.. So was his obsession for big factories especially steel plants of grand scale... In a way when in 1947 Nehru became PM he got a economy which was already in deep pits and minor corrections would show a much better results any given day.. The same was high;lighted in part 1 story

    Indira on the other hand has too much of baggage.. Her political lineage, a constant action packed tenure, her aggressive attitude, intelligence and stubbornness created way too many political foes.. Her contribution to economy is actually very very limited BUT

    Among the most prized forced decision is the nationalization of Banks.. From that time the banks as a incentive for meeting 40% Priority sector advances started opening branches in semi urban and rural places.. effectively if you look uptill 2000 the maximum number of branches opened is humongous.. some of the objectives and limitations are as below

    Objectives Behind Nationalisation of Banks in India

    The nationalisation of commercial banks took place with an aim to achieve following major objectives.
    1. Social Welfare : It was the need of the hour to direct the funds for the needy and required sectors of the indian economy. Sector such as agriculture, small and village industries were in need of funds for their expansion and further economic development.
    2. Controlling Private Monopolies : Prior to nationalisation many banks were controlled by private business houses and corporate families. It was necessary to check these monopolies in order to ensure a smooth supply of credit to socially desirable sections.
    3. Expansion of Banking : In a large country like India the numbers of banks existing those days were certainly inadequate. It was necessary to spread banking across the country. It could be done through expanding banking network (by opening new bank branches) in the un-banked areas.
    4. Reducing Regional Imbalance : In a country like India where we have a urban-rural divide; it was necessary for banks to go in the rural areas where the banking facilities were not available. In order to reduce this regional imbalance nationalisation was justified:
    5. Priority Sector Lending : In India, the agriculture sector and its allied activities were the largest contributor to the national income. Thus these were labeled as the priority sectors. But unfortunately they were deprived of their due share in the credit. Nationalisation was urgently needed for catering funds to them.
    6. Developing Banking Habits : In India more than 70% population used to stay in rural areas. It was necessary to develop the banking habit among such a large population.

    The major limitations of the bank nationalisation in India are:-
    1. Inadequate banking facilities : Even though banks have spread across the country; still many parts of the country are unbanked. Especially in the backward states such as the Uttar Pradesh, Madhya Pradesh, Chhattisgarh and north-eastern states of India.
    2. Limited resources mobilized and allocated : The resources mobilized after the nationalisation is not sufficient if we consider the needs of the Indian economy. Some times the deposits mobilized are enough but the resource allocation is not as per the expansions.
    3. Lowered efficiency and profits : After nationalisation banks went in the government sector. Many times political forces pressurized them. Banking was not done on a professional and ethical grounds. It resulted into lower efficiency and poor profitability of banks.
    4. Increased expenditure : Due to huge expansion in a branch network, large staff administrative expenditure, trade union struggle, etc. banks expenditure increased to a dangerous levels.
    5. Political and Administrative Inference : Many public sector banks badly suffered due to the political interference. It was seen in arranging loan meals. It ultimately resulted in huge NPA (non performing assets) of these banks and inefficiency.
    Source : Nationalisation of Banks in India - Introduction Objectives Demerits

    @WAJsal @AUSTERLITZ @MilSpec


    An old article on FT


    Opinion: Indira Gandhi – a flawed legacy
    By John Elliott

    Twenty-five years ago on October 25 1984, I was in Mussorie listening at lunchtime with other British journalists and diplomats to Tibetan refugee children singing to Princess Anne, who was visiting from the UK. The car drivers turned their radios on and heard the news – on Pakistan Radio – that Indira Gandhi, India’s prime minister, had been assassinated. We wondered if it was true, or did Pakistan Radio put such disinformation out every day? No phone or other communication links were available, but we all eventually decided it must be true and started a seven hour (or more, I forget) drive back to Delhi, our cars being plastered with newssheets mourning her death in towns on the way south.

    An era had ended. One of India’s most notable politicians and possibly its strongest leader was dead, shot by her Sikh security guards, leaving a legacy that will long be debated but is generally regarded more negatively than positively.

    Mrs Gandhi increased socialist economic controls started by her father Jawaharlal Nehru, and opened the doors to widespread corruption that leading politicians and bureaucrats now routinely practice day by day by.

    She also sowed the seeds for both her own death and that of her son, Rajiv Gandhi, by encouraging a militant Sikh leader in Punjab and separatist Tamil activity in Sri Lanka. She also increased separatist sentiments in Kashmir.

    If Nehru was greater than his deeds, as many people say, Indira was not as great as she should have been, and her deeds were more damaging than she probably intended.

    Nehru’s controversial post-independence policies of economic centralism and peaceful relations with China are now generally regarded as well-meaning but misguided. Mrs Gandhi’s mistakes however are generally seen less charitably as the actions of an insecure woman, desperate to build power and relying too much on her malevolent power-hungry younger son, Sanjay Gandhi, who encouraged her to declare a two-year State of Emergency in 1975.

    Strangely, Mrs Gandhi is seen more favourably abroad as a great though flawed leader who did her best to manage a massive poverty-stricken fractured country.

    It is easy to catalogue her failings and the damage that she did to the country that she undoubtedly loved. Maybe she did not realise the long-term impact of actions that she took for short-term political reasons – more often than not stemming from her paranoia and concern about her power base.

    But there was more to her than that. She tried more than any government before or since to protect India’s environment, which has been progressively plundered since independence in 1947, most recently by a series of corrupt environment ministers (until the current minister, Jairam Ramesh, was appointed in May).

    She is also remembered for strengthening the confidence of Indian women, and for her ability to reach out to people and to care – a gift that her daughter-in-law Sonia Gandhi, and her grandchildren Rahul and Priyanka, now display.

    In her final years, she started tentative reforms to open up the economy and unravel the central controls that Nehru and she had put in place. These reforms were continued hesitatingly by Rajiv, who succeeded her as prime minister and was killed in 1991, and then by the 1991-96 Congress government led by Narasimha Rao (with Manmohan Singh as finance minister), and by subsequent administrations.

    She also initiated (after a disastrous false start by Sanjay Gandhi) a very successful small car joint venture, Maruti, with Suzuki of Japan, which triggered a gradual modernisation of India’s engineering industry that is paying dividends now with the country’s internationally competitive auto companies.

    Her legacy also lives on in other ways, 25 years after her assassination.

    Internal and regional problems of the sort that Mrs Gandhi dabbled in for short-term political gain have expanded enormously and, judging by recent Naxalite developments in West Bengal, some politicians still play her dangerous game of trying to capitalise on the ambitions of rebel movements.

    In foreign relations, India has moved on from its reliance on the old Soviet Union, which Mrs Gandhi described as a friend that had never let the country down. As was illustrated by a speech made in Delhi this morning by former president George W.Bush, India now straddles wider international relationships, especially with the US that has recognised its nuclear weapon status. Speaking at a Hindustan Times conference, Bush described that agreement, perhaps a little euphorically, as India’s “passport to the world”.

    But India’s regional relationships have not grown out of the hegemony practised by Mrs Gandhi in South Asia. Here it is being outgunned by China, which is exacerbating border disputes between the two countries and raising the spectre of a short border war in 1962 that India lost.

    Finally, the Nehru-Gandhi dynasty is firmly entrenched – a fact that was reflected in the vast number of large sycophantic advertisements placed in newspapers today by government ministries to mark the anniversary.

    Sonia Gandhi controls both the Congress Party and the current government, and Rahul is preparing to take over. Such dynastic succession brings a form of political stability to India’s turbulent and fractured politics, but it also blocks the emergence of other leaders at the top.

    Even worse, it has now spawned a cascade of dynasties across the country involving families that rarely have the Nehru-Gandhi family’s sense of service, but instead are primarily interested in maintaining wealth that comes from prestige, patronage and corruption.

    This dynastic surge is partly both the cause and effect of a sharp decline in the standards of Indian politics that began in Mrs Gandhi’s time. Standards have worsened enormously in recent years as personal greed has replaced politicians’ concern for the country – especially in regional parties, whose role expanded dramatically after the 1980s as Congress declined.

    The writer was the FT’s first south Asia Correspondent (1983-88)
    Opinion: Indira Gandhi – a flawed legacy - FT.com
    Last edited: Mar 7, 2016
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    Jun 10, 2008
    +175 / 9,943 / -0
    I'm more interested in the story of development of national institutions and structures more than story of leaders which are quite well known,so the banking system changes were nice to read.Since this is a economy thread perhaps a bit on export-import trade of india after 1947?
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    Jan 5, 2014
    +185 / 16,737 / -0

    Export-Import Trade of India
    • Broad trends in the value of exports growth for the period 1950-51 to 1969-70 were almost near stagnation with small variations by year to year fluctuations.
    • The export growth was in the vicinity of 1.8 per cent compound rate per annum.
    • This was due to emphasis on import substitution and lack of attention to export stimulation measures.
    • On the other side, imports grew around 4 per cent per annum.
    • Import growth was relatively better in mid-1950s to mid-1960s.
    • This was on account of heavy emphasis on industrialization, particularly that of public enterprises which emanated from the Third Five Year plan.
    • However, this trend did not continue due to devaluation in 1966 and its severe adverse effect on balance of payments in the subsequent years.
    • Import control regime was tightened with licensing system
    • During this period, India failed to take advantage of opportunities offered by the growing world trade. This is evident from the fact that the world trade grew by 7.5 per cent per annum during 1950 to 1970.
    • India continued to remain the exporter of primary commodities and world trade diversified into a large number of industrial products.
    • The domestic industries were restricted by licensing system and modernization was difficult to come about.
    • The public enterprises were in the infant stage of development and it could not make a dent in the world market.

    • The balance of payments situation eased relatively in the late 1970s, the government initiated some measures of import liberalization.
    • Since mid-1980s, a number of liberalization measures were adopted, which include
      • some deregulation of industrial controls,
      • softening of restrictions on monopolies,
      • liberalization of capital goods imports with the view of technological up gradation and
      • modernization of industry,
      • some shifts from quantitative restrictions to tariffs,
      • greater subsidies for exports and
      • policy of active exchange rate depreciation.
    For the first time, a long term (three-year) import-export policy (1985-88) was adopted in order to impart stability to the policy framework. The policy reforms during the 1980s mainly focused on domestic industrial liberalization rather than on foreign trade liberalization. Very little was done to open up Indian industry to foreign competition.
    The import liberalization related mainly to inputs and components, which increased the effective protection of final products. However, the average protection levels remained both high and widely differentiated and imports of consumer goods were banned (except those goods which were considered to be essential). India’s trade regime was considered most restrictive due to its complex nature and wide number of tools used as policy instruments.

    1991 Onwards will be covered in part 3.

    Composition of Exports and Imports of this timeline


    Top 5 Indian exports were in
    1. Jute Manufacturers
    2. Textile Fabrics
    3. Tea and mate
    4. Ores and Minerals
    5. Leather and Leather products

    Top 5 Indian imports were in
    1. Capital Goods (non electric machinery, machine tools)
    2. Raw Cotton
    3. Cereal and cereal preparation
    4. Food and Live animals
    5. Petroleum, Oil and lubricants



    @Icarus @WAJsal @MilSpec @nair @scorpionx
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  13. waz


    Sep 15, 2006
    +66 / 38,658 / -0
    United Kingdom
    This indeed a very good read.
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  14. Spectre


    Jun 4, 2015
    +52 / 5,968 / -6
    PSL is and was a whitewash and a scam. Nothing has changed.

    It is just that since the last decade or two that the retail credits are rising as the bankers have discovered that they form the lowest "actual" risk portfolio, otherwise they would have carried on with lending to select houses. Any small businessman in India knows it is neigh impossible to get a loan without >80% residential mortgage or land as a security. Inventory is hardly ever counted and as for low income rural households - the scope of the fraud is so tragic that it is almost funny.

    Farm Loan waivers was a scam. Power Sector Funding is a scam. Real estate and hospitality a scam.

    I am just waiting for the house of cards to collapse and it will unless banks are bailed out which they probably will be.

    The relevance of the above to the topic is that every thing can be linked back to Nationalisation of Banks which crippled the financial inclusion instead of alleviating it. Why? Because of Political influence and the Industrialist Politician Nexus formation which gained momentum while Sanjay Gandhi was at helm.
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  15. Levina

    Levina BANNED

    Sep 16, 2013
    +60 / 37,144 / -1
    United Arab Emirates

    I am surprised that out of the father-daughter duo you decided to post the "undocumented controversies" of the daughter. Her personal history could have been spared from a thread, the title of which reads "The Indian Economy".
    She gets my respect for having the spunk to run a country dominated by men. Yes, she might have made mistakes, but I believe India has had very few leaders, Indira Gandhi is one of the very few who lead from front. I consider Modi as the only other PM of India(in recent times) who has as much sway on the Indian populace as Indira Gandhi had.
    Will read rest of your posts (related to economy) later.

    Thanks for the tag.
    Last edited: Mar 8, 2016
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