The Emergency Risks (Undertakings) Insurance Act, 1971 was enacted alongside its counterpart, the Emergency Risks (Goods) Insurance Act, 1971, during the Indo-Pak War of 1971. This conflict, which led to the creation of Bangladesh, prompted India to declare a national emergency under Article 352 of the Constitution on December 3, 1971. The war posed severe risks to industrial and infrastructural assets due to enemy actions like bombings, sabotage, and strategic disruptions.
Recognizing the need to safeguard critical economic assets, the Indian government introduced this Act to provide state-backed insurance coverage for industrial and infrastructural properties against war-related damages. The Act was part of a broader wartime economic strategy to ensure business continuity, protect investments, and maintain industrial output during the crisis. It drew inspiration from similar wartime insurance schemes globally, such as those implemented in the UK during World War II.
Economic Resilience: Provided a financial safety net for industries, ensuring continuity during wartime disruptions.
State Intervention: The government acted as the primary insurer, reducing reliance on private insurers who might avoid high-risk coverage.
Industrial Protection: Covered critical sectors like energy, mining, and transportation, which were vital for national security and economic stability.
The Act lapsed after the emergency but set a precedent for state-backed risk mitigation during crises.
Its principles influenced later policies, such as disaster management frameworks and pandemic-related economic relief measures.
The 1971 Act was a strategic legislative response to wartime economic vulnerabilities, blending compulsory insurance with central oversight to shield India’s industrial base. It underscored the government’s role in crisis management and left a blueprint for future emergency economic measures. By mitigating war risks for businesses, it helped sustain economic activity during a period of national upheaval.