Nehru's tryst with business

There is a widespread perception that Jawaharlal Nehru was rather business unfriendly. But that's not the entire picture

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There has been much comment in the last few weeks on Jawaharlal Nehru's contribution to India, especially in the realm of economic policy. There is a widespread perception that India's first prime minister was rather business unfriendly. His run-ins with Ghanshyamdas Birla, JRD Tata and Ramakrishna Dalmia are too well known. But that's not the entire picture. You can read Shri Ram, A Biography (Asia Publishing House, 1968) by Khushwant Singh and Arun Joshi to understand his complicated relationship with businessmen.

After the Bengal famine of 1942, it was decided to set up a fertiliser plant in the public sector at Sindri on the banks of the Damodar near Dhanbad. The factory was ready in 1951. The hitch was that while the initial project cost was Rs 10.53 crore, Sindri Fertilizers had cost the government over Rs 23 crore. If such were the project management skills of the government, Nehru's detractors said, the country would be bankrupt in no time. To silence them, Nehru brought in two men from the private sector, Lala Shri Ram of Delhi Cloth Mills and JJ Ghandy of the Tata group, on the company's broad of directors in December 1951.

Nehru's intent may have been noble, but his bureaucrats were reluctant - even in those early days - to share power. The first meeting of the Sindri Fertilizers board was held on December 31, 1951. It was more of a social get-together. CC Desai, secretary in the ministry of works, production and supply and the chairman of the company, introduced the board members to each other, apprised them of the government's philosophy of the public sector taking the Indian economy to commanding heights and resolved to prove skeptics wrong by making Sindri work. There was nothing serious on the agenda. It was New Year's Eve and the directors felt no need to spend long hours in the boardroom.

Then Lala Shri Ram took the mike. He delved into the company's article of associations and pointed out what he thought was an anomaly. It said that any director could be removed at the discretion of the President of India. This provision, Lala Shri Ram argued, would make the directors subservient to bureaucrats. Ghandy soon joined the bandwagon. After going through the articles of association with a toothcomb, he concluded that these had been drafted in such a way as to put immense power in the hands of bureaucrats. He wrote to Desai on February 12, 1952: "It occurs to me that an attempt has been made in the articles of association to compromise between the authority of a limited liability company and complete departmental control of the activities of the company." He pointed out that the articles laid down that the President would approve all borrowing, fix salaries of all directors, clear all executive appointments of Rs 2,000 per month and above, and direct all allocations of profits to reserves. What followed was a long war of words.

Nehru had also invited Tata to head Indian Rare Earths, one of the first public sector units floated after Independence. However, Tata refused. Shortly after that, Tata's Air India, Air India International and insurance venture were nationalised by the government.

In some ways, there was a meeting of minds between business leaders and Nehru. Thus, Nehru's First Five-year Plan was not very different from the Bombay Plan proposed by Tata, Birla, Ardeshir Dalal, Kasturbhai Lalbhai, Ardeshir Darabshaw Shroff, Lala Shri Ram and John Mathai: it talked of doubling the farm output and raising industrial production four-fold with an investment of Rs 10,000 crore, state intervention for an equitable society, transition from an agrarian to an industrialised society and a strong public sector in key areas.

bhupesh.bhandari@bsmail.in