Finance ministers and their balancing acts

A K Bhattacharya's book delves into the challenges, decisions, and political dynamics of India's economic policies through the lens of its finance ministers

India’s Finance Ministers: From Independence to Emergency (1947-1977)

Author: A K Bhattacharya

Publisher: Penguin Business

Pages: 445 + XVII

Price: Rs 999
 

What should be the key attributes necessary for a finance minister, Jawaharlal Nehru asked Morarji Desai. Desai, who had recently decided to relinquish the chief ministership of Bombay state, responded with four points. I paraphrase: One, the finance minister should be self-confident and should enjoy the confidence of the prime minister. Two, he should be from the same party with total belief in those ideals to implement them well. Three, the country must have complete faith in the finance minister’s integrity. And four, the chosen one should have the intelligence and common sense to seek the advice of experts. Nehru concurred, and asked him to be the next finance minister.

Of all the people who could take on the venture of tracking the careers of India’s finance ministers, there is doubtlessly no one better suited than

A K Bhattacharya.  A career spanning many decades of deeply informed reporting on the Indian economy and policy has enabled him to have not just a close perspective but access to countless anecdotes on how decisions were made and not made. The central strand around which the volume progresses are the key political-economic events that unfolded and how different personalities played out their roles in dealing with them.  The focus, of course, is on the finance minister, but it is as much on their relationship with the prime minister specifically and politics in general.

Mr Bhattacharya writes about the first 10 finance ministers of India who occupied the hot seat over a three-decade period spanning Independence to the Emergency.  The finance ministers are Shanmukham Chetty, formerly the Diwan of Cochin state, John Mathai, the economist and Swaraj and Justice Party member, C D Deshmukh, the ICS officer and also Governor of Reserve Bank of India, T T Krishnamachari, the industrialist who became a successful politician, Morarji Desai, the deputy collector of Godhra who joined Gandhiji, Sachindra Chaudhuri, the Cambridge-educated lawyer, Yashwantrao Chavan, Congress leader, and C Subramaniam, the architect of both the Green and arguably the White Revolution. The author does not omit the role of both Indira Gandhi and Jawaharlal Nehru when they took on the mantle of finance minister for brief periods.

What was most surprising to me was how things have not changed in recent years; similar pressures operated on the finance ministers then as they do now, the differing views in Indian polity on the extent of state intervention in the economy, the cooperation and conflicts that mark the relationship with different arms of the state, the need for support from the prime minister being some but not the only ones.

And it doesn’t end there. Similar economic challenges and solutions were faced in the past. Take, for instance, how India grappled with the need for devaluation right from its inception when the first rupee devaluation countered a devaluation of the sterling, the fear being that without an equal devaluation India’s exports would be impacted. The budget deficit also has an interesting history, with finance ministers of the past going to great lengths to limit or even eliminate the deficit. Another interesting one was how international investment was welcomed even during the Nehru era.

Some of these events are also marked by disagreements within the government, the devaluation of 57 per cent under Sachindra Chaudhuri is one example. The Mundhra scandal that forced TT Krishnamachari to put in his papers even though he had not gained personally.  Morarji Desai’s inflexibility and the blocking of bank nationalisation despite growing calls for it in the Congress.  The role played by C Subramaniam, who helped lay the foundations of the Green and White Revolutions, showcases how efficient implementation was driven from the finance minister’s office. These are only some illustrations of what has shaped India into what it is today.

In these stories of personalities from the past the author lays out a detailed log of India’s modern economic history.  The volume is well-researched and has interesting anecdotes.  The author is extremely clinical in his approach, and does not judge any of the personalities involved, which in this day is itself a rare phenomenon. In doing so, he brings out well the complexities of the political economic process and its interactions with personal idiosyncrasies. He weaves a rich story on an issue that would be straightforward anywhere else but is not necessarily so  in India. The back and forth that sometimes characterises Indian economic policyis simply a natural outcome ofcomplex minds working in complex environments.

Finally, this volume is a must for the student of Indian economy, politics, and administration.  It is also a must for libraries.  And perhaps more importantly, this is a recommended read for anyone interested not just in India of the past, but on how India is evolving, how its policies come together, and how they are implemented. The reviewer now keenly awaits the next volume in this series.

The reviewer heads the Centre for Social and Economic Progress. The views are his and not those of his organisation.  A K Bhattacharya is editorial director at Business Standard