Morarji Desai: Fiscal conservative who repeatedly saved India
By Prasenjit K. Basu
When I was 12+ years old, I borrowed both volumes of Morarji Desai's "The Story of My Life" from my school library a few days before the March 1977 election. I was fascinated by this 81 year old who had been denied the prime ministership repeatedly in the 1960s despite being the best man for the job. He had rescued India from its first Balance of Payments crisis in 1958 (caused by Nehru's inability to finance his quixotic ambitions for industrialisation in the Second Five Year Plan, starting 1956). Two years later, Nehru (and his cabal of fiscally-profligate acolytes, including YB Chavan and C Subramaniam) launched a determined attempt to loosen the budgetary purse-strings to finance another quixotic Five Year Plan. Morarjibhai stood firm in the face of their collective pleading, and got his way.
So it was little surprise that, after Jawaharlal Nehru was humiliated by Mao in October-November 1962 in the Himalayan military debacle, Congress president Kamaraj came up with a plan to get several key ministers (including Desai, the #2 in the Cabinet) to resign to "protect" Jawaharlal Nehru, the man whose 12-year-long catalog of blunders on China policy had just been exposed by Mao's PLA. Morarji duly resigned in August 1963 to shield Jawaharlal. When Nehru died, Kamaraj and his "syndicate" ensured that Lal Bahadur Shastri (an upright politician, but one who had never held the great offices of state or travelled outside India) would become PM, rather than Desai -- whose unswerving integrity was seen as imperilling the power of the regional satraps who held the Congress party's purse-strings.
He was to come back as Finance Minister in 1967 (after the 1966 devaluation of the rupee had deeply weakened the Congress politically), and again take India safely through rough waters. The day Indira Gandhi decided to run roughshod over the Constitution (and its fundamental right to property) in 1969 -- by nationalising 14 banks and abolishing the Privy Purses that had been guaranteed in perpetuity to the princes who signed onto the Union of India in 1947 -- she also sacked her DPM, Morarji Desai. While it is a well-known fact that India's real GDP grew at an average annual pace of just 3.7% between 1950 and 1980 (implying per capita income growth of just 1.3% annually), real GDP growth averaged 5% annually in the 9 years that Morarji Desai presented the Budget. Fiscal prudence paid!
In the 1971 election, Desai's Congress-O did poorly nationwide, except in his home state of Gujarat. Three years later, he took charge of the students' Nav Nirman agitation, brought down Indira's state government, and won the election in early-June 1975 that partly induced Indira to declare an Emergency on 25 June 1975, and jail Morarji the following day (along with all Opposition MPs). There was at least some basis for acting against Jayaprakash Narayan (who had after all asked the army and police to revolt against the elected government); there was absolutely no basis to act against Morarjibhai.
Twenty-one months later, Morarji Desai had the last laugh, rising to become Prime Minister (a story told in the third volume, published later). During his 2 years as Prime Minister, Morarji Ranchhodji Desai not only restored our civil liberties, but he reformed the economy (including moving numerous items into the Open General Licensing category of imports, a vital change) and delivered 6.5% annual economic growth -- the fastest 2-year growth pace that India achieved in its first 4 decades of independence (1947-87). Morarji Desai's place in India's modern history needs a proper re-evaluation. Reading his autobiography is a good place to start!
When I was 12+ years old, I borrowed both volumes of Morarji Desai's "The Story of My Life" from my school library a few days before the March 1977 election. I was fascinated by this 81 year old who had been denied the prime ministership repeatedly in the 1960s despite being the best man for the job. He had rescued India from its first Balance of Payments crisis in 1958 (caused by Nehru's inability to finance his quixotic ambitions for industrialisation in the Second Five Year Plan, starting 1956). Two years later, Nehru (and his cabal of fiscally-profligate acolytes, including YB Chavan and C Subramaniam) launched a determined attempt to loosen the budgetary purse-strings to finance another quixotic Five Year Plan. Morarjibhai stood firm in the face of their collective pleading, and got his way.
So it was little surprise that, after Jawaharlal Nehru was humiliated by Mao in October-November 1962 in the Himalayan military debacle, Congress president Kamaraj came up with a plan to get several key ministers (including Desai, the #2 in the Cabinet) to resign to "protect" Jawaharlal Nehru, the man whose 12-year-long catalog of blunders on China policy had just been exposed by Mao's PLA. Morarji duly resigned in August 1963 to shield Jawaharlal. When Nehru died, Kamaraj and his "syndicate" ensured that Lal Bahadur Shastri (an upright politician, but one who had never held the great offices of state or travelled outside India) would become PM, rather than Desai -- whose unswerving integrity was seen as imperilling the power of the regional satraps who held the Congress party's purse-strings.
He was to come back as Finance Minister in 1967 (after the 1966 devaluation of the rupee had deeply weakened the Congress politically), and again take India safely through rough waters. The day Indira Gandhi decided to run roughshod over the Constitution (and its fundamental right to property) in 1969 -- by nationalising 14 banks and abolishing the Privy Purses that had been guaranteed in perpetuity to the princes who signed onto the Union of India in 1947 -- she also sacked her DPM, Morarji Desai. While it is a well-known fact that India's real GDP grew at an average annual pace of just 3.7% between 1950 and 1980 (implying per capita income growth of just 1.3% annually), real GDP growth averaged 5% annually in the 9 years that Morarji Desai presented the Budget. Fiscal prudence paid!
In the 1971 election, Desai's Congress-O did poorly nationwide, except in his home state of Gujarat. Three years later, he took charge of the students' Nav Nirman agitation, brought down Indira's state government, and won the election in early-June 1975 that partly induced Indira to declare an Emergency on 25 June 1975, and jail Morarji the following day (along with all Opposition MPs). There was at least some basis for acting against Jayaprakash Narayan (who had after all asked the army and police to revolt against the elected government); there was absolutely no basis to act against Morarjibhai.
Twenty-one months later, Morarji Desai had the last laugh, rising to become Prime Minister (a story told in the third volume, published later). During his 2 years as Prime Minister, Morarji Ranchhodji Desai not only restored our civil liberties, but he reformed the economy (including moving numerous items into the Open General Licensing category of imports, a vital change) and delivered 6.5% annual economic growth -- the fastest 2-year growth pace that India achieved in its first 4 decades of independence (1947-87). Morarji Desai's place in India's modern history needs a proper re-evaluation. Reading his autobiography is a good place to start!
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