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Mainstream, Vol XLVI, No 50

Indira Vs Syndicate: First Round

Wednesday 3 December 2008, by Nikhil Chakravartty


The following piece appeared in Mainstream under ‘New Delhi Skyline’ shortly after Indira Gandhi carried out bank nationalisation. This was N.C.’s first contribution in this journal after that momentous step. It is being reproduced here after Congress President Sonia Gandhi’s latest speech underlining the significance of bank nationalisation for our nation in the light of the current global economic turmoil.

From Man-on-the-moon to Morarji-in-mess, last week has been unusually exciting for New Delhi—sometimes Morarji almost overshadowing the moon, but ironically the Lok Sabha on its opening day marked the political eclipse of Morarji soon after the historic ovation to the two intrepid astronauts landing on the moon.

Over the Morarji issue, it was definitely the astrologer who scored over the astronaut, for many in the Syndicate camp were found busy consulting horoscopes, though of course it is Morarjibhai alone who can confirm whether there is any truth in one forecast made sometime ago that July 16 (the day the Finance portfolio was taken away from him) was a day when he was expected to be a casualty.

The entire controversy over Sri Morarji’s rather ignominious exit from the Cabinet brought into open the political pressure groups that have been working at the Centre. When the bosses returned from Bangalore, the Syndicate was in top form; on one side they had bagged Sri Morarji Desai and on the other, Sri Chavan. And thereby they thought that they had successfully isolated Smt Gandhi. In fact the bosses were settling down to see that Sri Sanjiva Reddy could win without difficulty in the Presidential election. They were of course taken aback at Sri Giri’s surprise decision to contest the Presidential poll, but they felt that after they could corner Smt Gandhi at Bangalore, there would be little difficulty to go in for a total Congress mobilisation in support of Sri Sanjiva Reddy. The calculation which weighed heavily with the Syndicate bosses was that after Smt Gandhi’s discomfiture at Bangalore, the Pradesh Congress leaders would recognise the strength of the Syndicate and thereby would not dare to flout its mandate, leaving little room for any serious challenge from its critics. It was on this ground that the Syndicate was over-confident by the time the Bangalore session came to an end. In fact, they tried to plan a new offensive against Smt Gandhi for her sharp attacks on some of the bosses at the press conference she held at the end of the Bangalore session.

However, the whole situation changed on Wednesday when Sri Morarji Desai was struck by the bolt from the blue: the Prime Minister’s letter informing him of the Finance portfolio being taken out of his hand was no doubt an unceremonious notice to Sri Morarji Desai that he would not be the person who could be expected to give a new orientation to the economic policy as was implied in Smt Gandhi’s note which had been endorsed by the AICC session. The forthright manner in which the Prime Minister announced the decision to take over Finance was a reflection of the urgency with which she regarded the need for going ahead with radical economic reforms, which urgency was totally lacking in the reactions of the Syndicate bosses as they dispersed from Bangalore. For them, the AICC resolution was just a plethora of platitudes once more indulged in by the leadership to smother the Young Turks and to hoodwink the public.

It is significant to note that in all his complaints and the pathetic listing of grievances against Smt Gandhi’s decision to take over the Finance portfolio, Sri Desai nowhere had mentioned what he himself had done as a preliminary step to implement the new economic policy on his return from Bangalore. Rather his speeches at Bangalore gave the unmistakable sign of his preparing a defence of the status quo than an anxiety to move forward on the economic front. It is also significant that neither the stock exchanges nor the banker’s organs showed any sign of worry or anxiety over Sri Morarji Desai’s performance in Bangalore, or during the four days following the passing of the AICC resolution. The tocsin was sounded only in the afternoon of July 16 when they learnt that their favourite had suddenly tripped and was deprived of the Finance portfolio.

A favourite argument widely circulated by Smt Gandhi’s critics is that she had taken her revenge on Sri Desai for her own defeat at the Congress Parliamentary Board meeting at Bangalore. Had this been so there was no reason why she should not have gone against Sri Chavan as well; for it was Sri Chavan who, by all available reports, let her down in the Congress Parliamentary Board, having gone back on his word promising support to Sri Jagjivan Ram’s candidature half-an-hour before the crucial meeting of the Board.

The importance of the Finance portfolio in the implementation of economic policies and firm action in dealing with economic problems can hardly be ignored. It was not merely a question, as Smt Gandhi said in her statement in Parliament, of implementing agreed decisions but that “different presons came to be identified in the public mind with certain basic approaches and attitudes”. At the initial stage when a new orientation has to be given, it is meet and proper that the portfolio of Finance should have been held by the Head of the Government, thereby investing it with an importance which is urgently necessary. (One is reminded in this connection of Nehru’s exhortation to the Chief Ministers about the need of their taking over the food portfolio thereby emphasising in the public mind and in the administration as well, that the State Governments were giving top-most priority to the problem of food.)

It would therefore be a mistake to regard Smt Gandhi’s decision as being dictated by mere personal spite or factional considerations; the emphasis was undoubtedly on the urgency of making a break on the economic front and naturally that had to be given by the Prime Minister herself.

On the side of her opponents too, the furore raised over the mere change of portfolio is not so much a sign of factional pique but of the definite political resistance towards any new breakthrough on the economic front. Smt Gandhi’s timing of the acceptance of Sri Morarji Desai resignation within a couple of hours before the Cabinet decision to pass the Ordinance on bank nationalisation might have been accidental, but there is little doubt that in the public mind Morarji Desai’s exit from the Cabinet is linked up with the decision to nationalise 14 top Indian banks. If one scans through every word that Sri Desai uttered at Bangalore, it has to be admitted in all honesty that he could not be accused of having even held out the hope that the nationalisation of even a single bank was round the corner; in this respect, Sri Chavan was much more emphatic at Bangalore about the need to nationalise banks, but seasoned observers knew that Sri Chavan’s wishes were not horses since he was not responsible for the Finance portfolio.

Incidentally, much has been made of by Sri Desai himself about his sense of self-respect in refusing to accept the Prime Minister’s offer to stay in the Cabinet minus Finance; the manner in which his supporters went on pressing—sometimes bullying, sometimes imploring—that he should get back his lost portfolio did not speak very much of his sense of self-respect. Here too, what is significant is that the vested interest regarded the Ministry of Finance as of such strategic importance that they did their very best to retain their trusted man in its charge—even to the point of flouting time-honoured conventions of Cabinet functioning whereby it is the Prime Minister’s exclusive prerogative to reshuffle portfolios. It would have been perhaps more honest and honourable if Sri Desai had candidly said that apart from the filial anxiety to hide the son Kanti’s dirty linen in the confidential boses of the Finance Ministry, he would be failing in his service to Big Money if this portfolio had been taken out of his hand. And it is precisely this very fact that Sri Desai would no longer be in charge of Finance, that has created a sense of public enthusiasm over the Government decision to take over the first 14 of the private banks. It is not enough to claim that the ship would be sailing fast; it is necessary to announce who the captain on the bridge is.

This brings one to the point that the decision to nationalise the leading banks is only the first, though a very significant, step in the arduous journey towards a radicalised economic programme. The Ministry of Finance has right from the beginning been the close preserve of the vested interests. It is to be admitted that one of the weaknesses of Nehru’s political understanding was that he fought shy of putting crusaders against vested interests incharge of Finance; in most of the cases the accredited representatives of vested interests were put in charge of this crucial portfolio. One of the basic reasons for the emasculation of the planning process in this country—under which the disparity in wealth instead of being minimised has been heightened—has been that the strategic heights in the administration, that is, the implementation organs, have been effectively controlled by men whose links with or subservience to vested interests were undisputed.

It is not that every civil servant in the Economic Ministries is in the pay of Big Business; at the same time, there is no gainsaying that most of those holding key posts in these Ministries, particularly in Finance, have either got strong links with business houses or have ideologically an indulgent approach to High Finance, and in the case of a number of them at least the links with vested interests have been forged in course of their tenure of office. Sri L.K. Jha is not a solitary reaper.

This could be seen very interestingly during this week of excitement. After Sri Morarji’s unceremonious removal from the Ministry of Finance, the air was thick with the speculation that bank nationalisation would be coming in a few days (although only the fate of six banks were being gossiped about, the very six which had been suggested in the Subramaniam Note to the AICC). But one of the former Finance Secretaries who had to quit the Government as a result of the Mundhra exposure very knowingly discredited all talk of nationalisation on the ground that it could not be brought about so easily and he quoted with authority from his own experience how it took over a month to work out the details of the takeover of the Life Insurance companies which led to the brith of LIC. While such pseudo-authoritative opinions helped the Government indirectly to keep up the element of surprise necessary in the takeover of banks, this opinion itself reflects the mentality of the people who have so long guided the Economic Departments of the Government.

It is this stone wall that Smt Gandhi will have to break or climb over in her promised crusade against the power of vested interests corroding the economy. From the point of view of pronouncements, in her radio broadcast together with her speech at the general body meeting of the Congress MPs, as also her statement before Parliament on bank nationalisation, there was hardly anything that is exceptional; at the same time the question that is in the forefront before all those who have enthusiastically supported the decision to nationalise bank is: how is this going to be implemented unless the machinery of implementation is drastically overhauled and given a new orientation? It is not merely a question of shunting officers from post to post, but equally important is the need for giving a new orientation to this sector of the administration. In fact, it was this which was lacking when the Government embarked on a policy of public sector industrial undertakings and it is this which has become the headache of the Left-oriented United Front Governments at the State level, whether in Kerala or West Bengal.

The Ministry of Finance is going to be for Smt Gandhi a veritable jungle infested with all types of wild beasts from leopard to the reptile, and to turn it into a decent habitat in which the new economy could be nurtured is not going to be an easy job at all. The Big Business may have lost the battle for the retention of Sri Morarji Desai incharge of Finance, but it has not lost its entire host of cadres placed in all the vantage points in the Ministry. Even to spot them out would be a difficult job, because many of them after looking at the fate of Sri Desai would start singing the new tune with enthusiasm. More difficult perhaps would be to find the right people to replace many of them. It is one of the characteristics of Left politics in our country that there is too much of dilettantism and too little of study in depth. It is possible that Smt Gandhi would have to depend heavily on the eggheads from the university in Kennedy style, but to man the Ministry, it is not enough to get the eggheads.

In the specific task of bringing about successful nationalisation of the banking system, many problems have to be sorted out, such as the problem of overlapping of the different banks which is very common in this country since the private banks were under no compulsion to move according to a planned programme; then, there is the question of priority of investments, and the integration of that priority with the investment policy of some of the Government-run financial institutions, such as LIC, IFC and the Unit Trust—a point which has been brought out sharply by the Licencing Committee in their report just submitted before Parliament. The Government will also have to re-examine the entire functioning of National Credit Council, and whether that would require reconstitution. It is thus clear that the nationalisation of banks is only the first step; the entire fiscal and economic policies of the Government would require a new orientation if the nationalisation of banking has to serve its real purpose of strengthening the economy along radical lines.

It is which noticing that the writ petition against the Ordinance has been moved in the Supreme Court by votaries of free enterprise; Sri Masani and Madhok represent a common philosophy which cuts across party barriers. Thus one more obstacle has to be faced by the Government in trying seriously to implement its economic programme. It is clear that Smt Gandhi has not taken over a bed of roses.

The thorough discredit of the Syndicate in course of this entire episode is a political development of considerable significance. Its prestige, whatever there was, has been shattered; the giants in disgrace, bitter and frustrated, are licking their wounds.

An indication of the Syndicate’s morale was provided by Sri S.K. Patil’s behaviour during this crucial week. The thunder on Thursday gave place to unbalanced out-bursts against the Prime Minister on Saturday. One could not help feeling that Sri Patil had been shaken up rather badly and his traditional equanimity is practically gone.

In desperation the Syndicate followed the tactics of trying to pressurise Sri Chavan. If Sri Chavan could be persuaded to resign from the Cabinet in protest against the treatment meted out by the Prime Minister to Sri Morarji Desai, there would have been a first class political crisis, and the Syndicate was waiting to fish in the troubled water. There was a constant pressure campaign by the Syndicate on Sri Chavan to resign; even after the Cabinet decision on the nationalisation of banks on Saturday evening, Sri Chavan was called in by the bosses but he refused to bell the cat, and the Syndicate realised that it could not work up a crisis on the basis of a Ram Subhag Singh or a Hathi resigning.

Meanwhile, the second line of attack was planned through the Congress Parliamentary Party. Here too the prospects were bleak for the Syndicate. Even a cursory examination of the list of Congress MPs made it clear that there was no question of getting a vote of no-confidence passed against Smt Gandhi because such a motion, under the constitution of the Congress Parliamentary Party, required a two-third majority. Then, it was decided to move a simple resolution pledging support to the AICC programme and hailing the takeover of banks and at the same time urging the Prime Minister to give back Finance to Sri Morarji Desai in the name of unity of the party. On this score also, the Syndicate was pessimistic about getting the motion through. There was frantic lobbying throughout Saturday and Sunday, but by the time the Executive met late in the morning of Sunday, it was clear that there was no chance of getting even a simple majority resolution passed by the Congress Parliamentary Party against Smt Indira Gandhi’s action.

The pathetic position of the Syndicate was highlighted on Monday when the Congress Working Committee met. All the fire and thunder seemed to have vanished and the tame resolution exuding irrelevance asked the Congress President and the Prime Minister to meet and to sort out problems facing the unity of the party. One is tempted to ask, why did all the confabulations of the preceeding four crowded days take place at all, if this was to be the ultimate conclusion?

Sri Chavan’s role in this hectic week has come in for a good deal of criticism from the Syndicate as it did from the Prime Minister’s side immediately after the Bangalore session. The Syndicate circle seems to suggest that it would have made him the Prime Minister if Smt Gandhi could have been dislodged; what more could be demand of the Syndicate? As against this, a careful operator that Sri Chavan is, would have perhaps calculated that Smt Gandhi’s defeat in the Congress Parliamentary Party might have touched off a revolt, thereby cancelling the Congress majority in the Lok Sabha; alternately, there was the danger of Smt Gandhi calling for a mid-term parliamentary poll in the very wake of a defeat in the Congress Parliamentary Party. Such astute calculations are natural for political personalities of Sri Chavan’s calibre. And he did not believe in the heroic, giving up in a huff such an important portfolio as Home, just to show sympathy with Sri Morarji Desai in the hour of his fall. The fate of Sri Nanda forced into hibernation could not possibly be lost upon any Home Minister.

In the first round, it is clear that Smt Gandhi has decisively scored a victory over the Syndicate. However, it is in a desperate state. It has now decided to concentrate on getting Sri Sanjiva Reddy elected in the Presidential poll; and once he becomes the President, the Syndicate will try to trounce Smt Gandhi by having a President who will not hesitate to harass the present Prime Minister. Big business patrons of the Synicate bosses are reported to have advised them on this strategy. Sri Sanjiva Reddy himself set the pace by not only grovelling before the Prime Minister when he met her in the Capital on Saturday, but also by running all the way South to get Rajaji’s blessings for his gamble contest. In this context the canvassing for the Presidential election assumes unusual significance for Indian politics.

The next three weeks will witness whether the Syndicate will be able to stage a come-back riding on Sri Reddy’s back. There is however a growing awareness not only in the Left parties but among a good section inside the Congress that Sri Reddy’s defeat in the Presidential poll will scotch the Syndicate’s bid to capture the power-structure at the Centre.

(Mainstream, July 26, 1969)

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