When J.R.D. Tata Wrote to Indira Gandhi on the 'Disturbing Decline' in Industrial Growth

India's economic situation is grim. At the recently concluded 12th annual general meeting of Bajaj Auto, the company’s chairman Rahul Bajaj severely criticised the government’s economic policy, saying: “There is no demand and no private investment, so where will growth come from? It doesn’t fall from heavens.” The industrialist has chosen to speak up at a time when criticism of the government has proven to be highly dangerous. Intimidated by “tax terrorism” of the central tax authority, businessmen prefer to keep mum.

The environment was similar in the early 1970s, when the economy was in doldrums and Indira Gandhi was riding the crest of her massive election victory (Congress won 352 seats) and the Bangladesh War. Nationalism and populism were Gandhi’s two main planks. She appeared unassailable. The centralisation of power in her hands was unprecedented.

Link magazine described the “Indira wave” during the elections as "a mandate for radical reforms...." Further saying "against the forces of reaction and Right parties… it will be easy to push through the Lok Sabha any constitutional amendments.” And she did just that, pushing through the repressive Maintenance of Internal Security Act (MISA), which sanctioned the arrest and imprisonment of individuals without trial for up to a year.

This was something akin to the recently amended Unlawful Activities (Prevention) Act, passed by the current Modi government on the pretext that it is “essential to keep law enforcement agencies one step ahead of terrorists.”

Also read | Allowing the State to Designate Someone as a ‘Terrorist’ Without Trial is Dangerous

Much like Modi – who is relentless in pursuing his right-wing ideological agenda – Indira Gandhi too blatantly flaunted her leftism. The only difference between the two is that Modi’s ideological predictions are rooted in RSS ideology, while Gandhi's leftism was, at best, flimsy. The other difference between the current and Gandhi’s time was that in the 1970s, the US had abandoned India and was busy chasing China.

Gandhi had gathered in her office some Left-oriented bureaucrats. Mohan Kumaramangalam and P.N. Haksar guided her policies. According to Katherine Frank, Gandhi’s biographer, Kumaramangalam “called for a committed judiciary just as Haksar had defended the idea of a committed bureaucracy.”

In the midst of an ongoing ideological war, the economy was plummeting, prices were rising and so was discontent from all quarters. During this time, India’s top industrialist and the government were not on good terms. The 1969 Dutt Committee report on industrial licensing had damaged the trust levels between the government and the industrial houses.

In this atmosphere of dissatisfaction and discontent, J.R.D. Tata decided to give a piece of his mind to Gandhi. Unlike Rahul Bajaj, who has spoken against the economic downturn in a public forum, Tata chose to express himself through a confidential letter to the prime minister – he probably did not anticipate his private correspondence making its way into the public domain.

According to archival records, on May 18, 1972, Tata sent a lengthy memorandum to Prime Minister Indira Gandhi, copies of which were shared with Haksar, Kumaramangalm and P.N. Dhar. The memorandum was a view on the “disturbing decline” in the industrial growth in the country in the wake of the global oil crisis. He suggested solutions and wrote that there was “no simple and universal remedy” to the Indian problems.

Tata was conscious of the leftward tilt within the Prime Minister’s Office (PMO), therefore, he clearly mentioned in the covering letter that in the prevailing environment in the country, economic advice from an “industrialist may not be politically acceptable.” Gandhi replied to Tata after two months, apologising for the delay and thanking him for the suggestions.

On August 23 of that year, Tata sent another letter to the prime minister in which he complained that his memorandum, a “confidential submission” to her, had been leaked to the press. He wrote that parts of his memorandum had appeared in the national daily, Patriot, and the Communist Party of India’s organ, The New Age. He was enraged by the fact that on August 19, his entire memorandum had been published verbatim in the Mainstream magazine. The All India Radio also mentioned Tata's correspondence in its 'Spotlight' programme.

Incensed by the “leak,” Tata wrote to Gandhi in anguish:

“Apart from being disconcerted at a confidential communication to you and a few others becoming public knowledge, I felt distressed at the leftist press evidencing so little confidence in the Prime Minister and her government as to express alarm at what the New Age called “contours of subversion” to which apparently, without the watchdogs of the Left, the Prime Minister would succumb!” (Emphasis added)

Tata concluded the letter by saying that since the memorandum was in the press, and had been discussed in the parliament, he was under no obligation to keep it a secret. Haksar advised the prime minister against sending a detailed reply to Tata. Instead, Haksar wrote to him on August 28, 1972, informing him that he was free to release the memorandum to the press.

Also read | Ten Reasons Modi is Just Like Indira Gandhi. And That's Not a Good Thing.

Incidentally, on August 22, 1972, a day prior to Tata's complaint letter, the failure of the industrial policy was discussed at a special meeting of the Union cabinet. It is during this time that Gandhi promoted the idea of “joint sector” collaboration between the government and private sector and said that nationalisation was only one of the instruments that her government was employing to curb the concentration of economic power in private hands.

On 28 August, The Hindustan Times editorial voiced support for Tata and wrote that his letter specifically accepted the broader frame of policy and the political context in which the endeavour of 'garibi hatao' was to be carried out. The editorial argued that the industrialist only suggested using the “potentialities of about half the organised industrial sector constituted by the so-called monopoly houses” in the poverty eradication endeavour of the government.

Tata agreed to the government holding majority shares in the joint sector. However, he was of the view that the government’s bureaucracy was good but it was trained and fostered in an administrative culture that was not conducive to the management of the joint sector.

It is always difficult to pinpoint the origins of a press leak. Firstly, it always reaches the press through a circuitous route, and secondly, journalism ethics prevent the source of a leak from being revealed. The leak of Tata’s memorandum to the press continues to remain a mystery. It could have been released to the left-liberal press by Haksar, the top man in the PMO, who probably wanted to send a signal that big business had no business being involved in government’s decision making.

Alternatively, it could be speculated that the leak was engineered by Tata himself to reach a wider audience. Who knows, even Sanjay Gandhi could have been involved in the leak to undermine the colossal presence of the leftist bureaucracy, especially Haksar, in the PMO. Incidentally, by 1973, Haksar had left PMO because he was principally opposed to Sanjay Gandhi’s plans for setting up a public sector car manufacturing unit in India.

Indira Gandhi’s arrogance coupled with the dwindling economy finally led to a situation where her electoral mandate lay wasted. She declared the Emergency to save her own skin. The lesson of democracy that she had learnt in her youth finally helped her remove the Emergency. What path will Modi adopt to tackle the growing economic discontent in the country? Will he follow the path chosen by Gandhi and use draconian measures and populist rhetoric to preserve power? More importantly, will he have the sagacity to learn from his mistakes and strengthen Indian democracy?

Atul Bhardwaj is a honorary research fellow in the Department of International Politics, City, University of London.

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