Economic Costs of the Indian Emergency

In 1975, the President of India declared a state of emergency (the Emergency), granting Prime Minister the power to rule by decree. This paper investigates the economic fallout of this exceptional event in India's post-independence history. The analysis shows that the Emergency adversely affected the economy, and the effects started materializing soon after its imposition and accumulated over time. If not for the Emergency, India's real GDP per capita in 1985 would have been more than 70 percent higher. A series of falsification tests support this evidence of the Emergency-induced drag. Few other developmental outcomes were also negatively impacted. For instance, life expectancy in 1985 would have been four months higher in the absence of the Emergency