How did the Indian government respond to the high level of inflation at the beginning of the 1970s?

By freezing the salaries of its employees

Answer: By freezing the salaries of its employees
To reduce expenditure, the government froze the salaries of its employees in response to the high level of inflation in the early 1970s.

In the elections of 1971, Congress had given the slogan of garibi hatao (remove poverty). However, the social and economic condition in the country did not improve much after 1971-72. The Bangladesh crisis had put a heavy strain on India’s economy. About eight million people crossed over the East Pakistan border into India. This was followed by war with Pakistan. After the war the U.S government stopped all aid to India. In the international market, oil prices increased manifold during this period. This led to an all-round increase in prices of commodities. Prices increased by 23 per cent in 1973 and 30 per cent in 1974. Such a high level of inflation caused much hardship to the people. Industrial growth was low and unemployment was very high, particularly in the rural areas. In order to reduce expenditure the government froze the salaries of its employees. This caused further dissatisfaction among government employees. Monsoons failed in 1972- 1973. This resulted in a sharp decline in agricultural productivity. Food grain output declined by 8 per cent. There was a general atmosphere of dissatisfaction with the prevailing economic situation all over the country. In such a context non- Congress opposition parties were able to organise popular protests effectively.