| INDIA LEGAL |July 22, 2019 3CAUGHT up recently with S Narendra who,
during an illustrious career spanning several
decades as a veteran senior bureaucrat, ser ved
as press adviser to several prime ministers
and was India’s Principal Information
Officer. He also served as Information Officer in
the Ministry of Finance under Indira Gandhi. He
brought to my notice a recent article he had pen -
ned and wondered why the subject he had chosen
had not received the media attention it deserved.
The subject was the 50th anniversary this
July of bank nationalisation in India. He agreed
that India Legal could use it as a Q&A in the for-
mat of an interview, the excerpts from which are
produced below:Why do you believe any importance should be
given to this subject in today’s economic situation?
Because it is a positive legacy. When international-
ly well-known bank brands were coming crashing
down under the weight of their own greed ten
years back, (2007-08), and in turn seeking
bailouts from their governments, Indian and for-
eign commentators had noted that Indian banks
did not catch the global infection because of their
government ownership. In fact, India should have
thanked the much vilified Indira Gandhi for na -
tion alising private banks that prevented the In -
dian financial system from going bust along with
the global meltdown. The nationalisation of com-
mercial banks 50 years back came as a popular
political drama serving good economics as well.What was the atmosphere then, internationally
and within the government?
On the day man first landed on the moon, the
Indian government walked the first step on its
road to climbing the “commanding heights of the
economy” with bank nationalisation. This distant
July month was packed with intrigue and strug-
gle for power within the Congress party andeconomics became the handmaiden of power
and influence.You were witness to dramatic power shifts at that
time. What were some major elements?
Very swift political currents began to reshape the
In dian polity after Prime Minister Lal Bahadur
Shastri’s death in early 1966. Power brokers in the
party installed Indira Gandhi as his successor by
defeating Morarji Desai in the prime ministerial
poll. In the first general election held in the post-
Nehru era in 1967, the Congress party had lost
power in many states and the opposition ranks in
Parliament had swelled, especially that of the
Swatantra Party representing ex-royalty and busi-
ness and the Jana Sangh. The Congress was seem-
ingly losing its traditional social and regional base
and also the support of business and industry. In
the new Congress government, Morarji Desai was
made the deputy prime minister as well as the
finance minister.Weren’t there major differences between Indira
and Morarji Desai?
While Indira opposed his proposal to bring farm
income under income tax, Morarji Desai stalled
her suggestion for bank nationalisation, with his
“social control”—a system of token oversight over
banks. The Bangalore All India Congress
Committee (AICC) session in the summer of 1969
at the glass-house in Lalbag, became a watershed.
The party president, Nijalingappa, associated with
the party old guard, in his opening address to the
session, had given a call for pro-market policies.
Indira countered with her “stray thoughts”, outlin-
ing a more pro-people line hinting at greater
government control over the economy. When the
post of president of India fell vacant in May, after
the death of Dr Zakir Hussain, the rift within the
party became an unbridgeable divide. Indira and
her supporters decided to oppose the nomineeECLIPSE OF
A GOLDEN LEGACY?
Inderjit BadhwarI
“The golden
anniversary of
bank nationalisa-
tion should have
been a fitting
occasion for
recording their
saga—their
immensecontribution to the
building of modern
India during the
past five decades.
This would be very
interesting
economic history.
Unfortunately,
their NPA story,
authored by Indian
politics, is
eclipsing their
positive legacy.”Letter from the Editor