Lawyer and diplomat Parmeshwar Narain Haksar, or PNH, took over as Secretary to Prime Minister Indira Gandhi on May 6, 1967, when the economy was in crisis and her Cabinet “hardly cohesive”. He emerged as her “ideological compass and moral beacon from May 1967 to January 1973”. Haksar guided Mrs. Gandhi through “the nationalisation of banks, coal and oil refineries, the abolition of privy purses, the victory over Pakistan in the war of December 1971, the creation of an independent Bangladesh and subsequent agreements to bring durable peace to the subcontinent”, before drifting apart from her by “bravely opposing the Emergency from the inside,” writes Jairam Ramesh in his new book Intertwined Lives: P.N. Haksar and Indira Gandhi. An excerpt:
July 1969 was to see a transformed Indira Gandhi. She sounded the bugle through her historic ‘Note on Economic Policy and Programme’ that was circulated among delegates of the AICC at Bangalore on July 9, 1969. Quite a few people contributed with ideas. But the pivot was P.N. Haksar who gave shape, structure and substance with the help of some of his colleagues in the Prime Minister’s Secretariat. Whatever was given to Indira Gandhi by way of suggestions ended up on his desk and his task was to put it all together as a cohesive package. This historic note that was to change the nature of the Indian political economy began in Haksar’s words thus: “The time has come to restate our economic policy and set the direction in which we have to move to achieve our social goal. This has become all the more necessary in view of doubts that have been raised with regard to our intentions and our willingness to take the hard and difficult steps which are necessary. In respect of many of the items some steps have already been taken but what is important is to intensify our efforts and keep the social goal all along in the forefront.”
The note ended by saying: “These are just some stray thoughts rather hurriedly dictated.”
Hence, this has come to be known as the ‘stray thoughts note’. It went much further than the 1967 10-point economic programme of the Congress Forum for Socialist Action. For instance, in the backdrop of the Naxalbari rebellion and the view gaining ground that the Green Revolution could well become a Red one, the stray thoughts note laid elaborate stress on land reforms and review of agricultural wages. It said: “Land reform is no less important. If we do not act urgently, grave political and economic problems will arise.”
Socialist push
On July 9, 1969, while the stray thoughts note was being circulated at the Congress conclave in Bangalore, he sent Indira Gandhi a note to prepare her for the tumultuous days ahead. Haksar wrote: “I feel that P.M. should show a sensitive understanding of the feelings, emotions, anxieties and thinking behind the economic programme elaborated by the so-called Young Turks. There is an evidence of sincerity of purpose... The basic feature of our society is that there are millions upon millions of people who are dispossessed. In these conditions, the competitiveness of market economy, the struggle to get the good things of life in education, health, jobs becomes very intensely acute. And when one sees the contrast between the dire poverty of the millions and the riches of the few, the conflict becomes even more evident. If these things are allowed to continue, the society will be rent asunder.
“I feel that P.M. should reiterate her faith in a socialist society alone being able to solve the problems of our country. For this purpose, it is necessary not merely to implement certain programmes like nationalisation of banks, etc. but it is equally necessary to educate people politically; and above all the Congress cadres need to be educated…
“While P.M. should express, in a forthright manner, her deep commitment to socialism, she should, at the same time, express anxiety about producing bureaucratic State capitalism in the name of nationalisation. Therefore, a realistic approach to the problem of our time would consist in devoting next two to three years in improving the efficiency, the organisation of our existing public sector enterprises, carrying out a vast educational programme in favour of socialism, building up new cadres to manage our new public sector enterprises... In the meantime, a great deal could be done to improve the social control of banks by ensuring that the larger percentage of deposits is made available for the purposes of public sector development... [italics mine].”
Here was a Prime Minister’s counsellor giving her the courage of his convictions in an unequivocal manner. Haksar’s ideology comes through clearly. But what also is very interesting is that on July 9, 1969, he was still thinking and talking in terms of ‘social control’ of banks. Within 10 days however, banks were to be nationalised. Those would be ‘The Ten Days That Shook India’.
Bank nationalisation
It was on bank nationalisation that were to first change their stance and show their cards. So far they had gone along with Morarji Desai and had supported ‘social control of banks’, even though that had been considered an eyewash by Chandra Shekhar and rest of the CFSA. But now Indira Gandhi’s stray thoughts note had her saying: “There is a strong feeling in the country regarding nationalisation of banks. We had taken a decision at an earlier AICC but perhaps we may review it. Either we can consider the nationalisation of the top five or six banks or issue directions that the resources of the banks should be reserved to a larger extent for public purposes.”
As late as July 9, 1969, Haksar was not entirely convinced that banks had to be nationalised right away. Then three days later came the assault on Indira Gandhi’s authority with the announcement of Sanjiva Reddy as the Congress’s presidential candidate. Subsequently, Morarji Desai’s resignation was secured after four days. My guess is that between July 12, 1969 and July 15, 1969, Haksar and Indira Gandhi must have confabulated and decided to shed their caution on bank nationalisation. On July 16, 1969, she asked PNH to meet with K.N. Raj, one of India’s most distinguished economists and find out his views on bank nationalisation. But just three days later, on July 19, 1969, 14 banks were indeed nationalised, making one of Indira Gandhi’s ‘stray thoughts’ an immediate reality.
Excerpted with permission from Simon & Schuster