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Tuesday, December 25, 2018

JRD Tata and PN Haksar exchange

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JRD Tata’s Letter

Dear PN: 

You have asked me whether it is not time for me to reflect creatively and constructively on the state of our country. I have done so, and for a long time … I was a little puzzled by your own puzzlement … I don’t know by what criteria you compared us … with our European and Japanese counterparts, and what you would expect from them, but if it is initiative and creativeness in their field of activity, I would imagine that … men like Jamsetji Tata and his sons fully measured up to their counterparts elsewhere in the world , including America, In a smaller way, men like the Wadias who built men-of war for the British Navy, or the Sarabhais for their contribution to science and culture, also measure up …

The advent of independence brought a dramatic change in the situation which would normally have provided the same vital base as in other countries for great projects, ventures and adventures by Indians. An essential pre-requisite, however, would have been freedom of choice, of investment and of action … Instead of releasing energies and enterprises, the system of licences and all-pervasive controls imposed on the private sector of the country , combined with confiscatory personal taxation, not only discouraged and penalized honest free enterprise but encouraged, and brought success and wealth, to a new breed of bribers, tax evaders and black marketeers … The nationalization, on expropriatory terms, of insurance and banks, conveniently created a state monopoly of investible and lendable funds, while fiscal policies, combined with the use made of the Companies Act, the Industries (Development and Regulation) Act, the Monopolies and Restrictive Trade Practices Act and innumerable other enactments, regulations and administrative decisions effectively concentrated all economic power in the hands of the politicians in power and the bureaucracy.

Under such conditions, efforts at promoting and bringing to fruition large projects, however desirable, became nightmarish and time-consuming one, or ended in outright rejection. I need only cite the example of the great Tata Fertiliser Project of 1967 which would have brought immense benefits to the Indian economy but was rejected outright on the ground that Tatas were already too big … I am sorry to inflict this long tirade on you, for which my excuse is that you, albeit innocently, provoked it yourself by your question: I began my 55-year career as an angry young man because I couldn’t stomach the foreign domination of our country … I end it as an angry old man … because it simply breaks my heart to see the continuing miserable fate of the vast majority of our people, for much of which I blame 35 years of ill-conceived economic policies of our Government. 

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PN Haksar’s response

I have your letter of September 26. It moved me deeply. It moved me because you wrote it with such passion, sincerity mixed with compassion for the “continuing miserable fate of the vast majority of our people”. Please do not misunderstand me. It was not part of my intention to enter into polemics. Problems of our country, howsoever one may view them, are much too complex to yield to an attempt to score debating points. Is the essence of what you say is that all these years, following our Independence, the government policies have brought us to the present situation? Apparently, a simple-minded Adam Smithian policy would have done the trick in India. But even this proposition needs to be worked out. It is not so self-evident in India. And even Adam Smith before he set himself out as some sort of an Economist , had a very strong feeling for morality … It is true that Jamshedji Tata along with men like Walchand Hirachand or Ambalal Sarabhai articulated the deeper urges for modernization of our social, economic and political order. No such urge is visible today at the collective level of our industrialists and men and women engaged in trade and commerce. Be that as it may, the sole object of my raising the question which I did was to invite your attention to the fact that the entire process of historical transformation of an ancient society such as ours, where human beings are deeply enmeshed in all kinds of valid or invalid traditions, thought processes, social structures, etc., cannot be subsumed within a category called ‘Economic Policy’, howsoever conceived … Might I conclude this letter by saying that I deeply respect your anger, but from what little experience I have of life, anger has always been a bad counsellor.

Excerpts from Intertwined Lives PN Haksar and Indira Gandhi by Jairam Ramesh

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