That storm in a tea cup

As it came after The Accidental Prime Minister, Sanjaya Baru's potboiler, Strictly Personal: Manmohan & Gursharan, written by the former prime minister's second daughter, Daman Singh, was dismissed as a sedate affair, a protective daughter's feeble attempt to control the damage. Truth be told, Strictly Personal is as racy and packed with information as Baru's book. Of course, Manmohan Singh chooses his words carefully and gives little away, but the book captures very well his remarkable journey from an obscure village in pre-Partition Punjab to the highest echelons of power. And Daman Singh doesn't hesitate to reveal dark family stories and explore topics that households normally avoid at the dining table.

Strictly Personal explains in simple terms the direction economic policy took after Independence. For me, another piece of a jigsaw fell in place after reading it: the Swraj Paul affair. In 1983, London-based Paul had tried to wrest control of two Indian blue-chip companies, Escorts and DCM, from the Nanda and Shriram families, respectively, under an investment scheme launched the previous year by the government to attract foreign investment. But it came with the rider that no non-resident Indian, or NRI, could own more than 5 per cent of an Indian company. Paul circumvented the rule by buying almost 10 per cent of Escorts through 13 entities. Paul claimed he had purchased the shares before the rule came into being. Also, all NRIs were required to take permission from the Reserve Bank of India, or RBI, before investing in Indian paper.

The governor of RBI at that time was Manmohan Singh. As the matter boiled down to the legality of the share-purchase by Paul, RBI was called to investigate. It started by asking Punjab National Bank, which was channelising money from Paul to the Delhi brokers who had brought the shares, to freeze the account. This threatened to precipitate a payment crisis on the Delhi Stock Exchange. It was averted only after the brokers rustled up the cash from their private sources to pay the sellers. RBI told the finance ministry that it intended to reject Paul's application. "Citing the nature of ownership of (Paul's) Caparo group, it believed that such a precedent would make it difficult to enforce foreign exchange regulations in the future," Daman Singh writes in Strictly Personal. "However, the government had no such misgivings and ordered RBI to go ahead and grant the permission, which it then did."

Escorts got relief from the Bombay High Court against the government order and the RBI permission. The matter reached the Supreme Court, which upheld the legality of the permission. Manmohan Singh tells his daughter that he had "serious differences" with the finance minister, Pranab Mukherjee, and "sometimes there was tension" but he played along because the window for NRIs was the government's scheme and RBI was just an agent for its implementation. Har Prasad Nanda, the founder of Escorts, in his 1992 book, The Days of My Years, counted Manmohan Singh among his friends in the whole affair, apart from politician Mohammad Yunus, bureaucrat P C Alexander, businessmen J R D Tata and Keshub Mahindra, and legal luminary Nani Palkhivala.

Manmohan Singh's stand obviously irked Paul. In his aggressive media campaign, meant to drum up popular support, Paul alleged that the RBI governor was acting at Nanda's behest. In his judgment, Justice Chinnappa Reddy of the Supreme Court remarked that statements attributed to Paul were "saucy, rude and impudent", and called Manmohan Singh "a highly respected civil servant of our country" and presumed that "he did not think it proper to go to the press as readily as Paul and involve himself in an unsavoury controversy". In his typical understated way, Manmohan Singh tells Daman Singh the whole case was a storm in a tea cup. "It was nothing."

bhupesh.bhandari@bsmail.in