gfiles magazine

July 17, 2011

Educating Nehru about black money

...And other funny tales about graft

A little corruption is good for one’s integrity, a French journalist once told me during Francois Mitterand’s 1988 re-election campaign. It sort of innoculates one against bigger corruption, he said. “This may be true of the French,” I told him, “In India, every little act of corruption, far from innoculating the corrupt, seems only to spur him to ever bigger acts of villainy.” Anyway, the makeshift adage trotted out by the French journalist did not seem to be true even for French politicians and businesses. Corruption scandals were tumbling out from every office bureau in the country. Two or three Paris municipal fathers were in prison. I think a former Mayor, too.
Some Ministers had been arraigned on serious corruption charges. So were several provincial political leaders. All sorts of charges were flying around. At a café near the Le Monde office in Paris, I was regaled with jokes about graft in France. “You know why the steering wheels of French cars are so small?” someone asked. “No,” I said. “Well, that’s because our Ministers have to drive with handcuffs on!”
A loud burst of laughter issued from even those who must have been hearing it for the umpteenth time. Elsewhere, someone said, “You know how much money such-and-such Minister in Paris is said to have made? No? I’ll tell you: enough so he can stand on the pile of banknotes he has amassed to see through the window of his bank in Zurich.”
France was not the only country in Europe so overrun with talk of corruption and illegal foreign accounts of politicos and tycoons. Italy, in some ways, felt worse and the people there were a lot more despondent. Spain and Portugal did not seem in such dire straits but conversation there was not altogether free of mention of corruption either. All talk in Greece and Yugoslavia soon veered to corrupt politicians feathering their nests.
People in Austria and Belgium admitted, even if reluctantly and grudgingly, that there was some corruption in public life, though not to the extent elsewhere. Only the Germans felt their country was, by and large, free from such corruption. The Finns, the Swedes, the Norwegians and the Danish I met at house parties, cafés or at business establishments did not seem to think any significant corruption existed in their countries. Later, I learnt that New Zealand, Canada and Singapore too were in that category. I bring up all this because Indians often tend to take these countries as benchmarks when lamenting corruption at home. If we compared ourselves with countries in Africa and Latin America, we would have reason enough to feel rather satisfied with ourselves. But then we do not see ourselves in the same category.
Nehru, Kaldor and Lady M...
SOON after assuming office, Nehru had constituted a tax investigation commission under Srinivasa Varadachari (1949). That did not seem to yield adequate results. Then, in the early 1950s, Nehru decided to bring a Leftist economist, Nicholas Kaldor, from his alma mater, Cambridge University, to advise him on taxation, black money and so on.
There is an anecdote about that which I heard from Babu Triloki Singh, a Socialist leader-turned-Congressman of Allahabad. He was a member of the Rajya Sabha in the 1970s and a great raconteur with a treasure trove of anecdotes about the politics and politicians of his younger days. It was a pleasure travelling with him in the Lucknow Mail from Delhi to Lucknow, a journey I had occasion to undertake often in those days as the Lucknow correspondent of a Delhi-based daily. According to Triloki Babu, when Nehru disclosed to some of his colleagues his desire to invite Kaldor to survey the Indian tax system and suggest improvements, Ministers and even bureaucrats were alarmed. They wondered what dirt Kaldor might turn up. So some of them said to Nehru that the government and Ministers were perhaps not yet prepared to handle a foreign economist’s intrusion in such administrative areas.
But Nehru was adamant. Then someone said, “Panditji, what do we know of issues like black money? We wonder if even you know anything of it. How are we going to frame terms of reference for Kaldor when we ourselves are so ignorant of high finance, working of businesses and the taxation system? Would it not be better if we first prepared ourselves for this?” “Yes, we must,” said Nehru. “Actually, I should do it first. Tell me, what shall I do?” The crafty Rafi Ahmed Kidwai, Minister for communications and one of Nehru’s favourites, suggested that he consult people from different walks of life such as business and media. Among those he suggested was Kanpur industrialist Laxmipat Singhania who was close to Nehru and the Congress in general. “Tell me, what is black money, how do you make it and who all do you give it to?” asked Nehru when Singhania arrived at his office a few days later. The conversation went as follows:
Singhania: But there is no such thing as black money, Panditji, that I know of.
Nehru: How can you say that? Everyone is saying that a lot of black money is stashed all over that is harming the economy. And you say there is no black money!
Singhania: Truly, there is no such thing as black money. All money is the money that you…I mean, the government… prints. When that money is with the government or in that bank it is called money and when it comes into our hands some people begin to call it black money which is very unjust.
Nehru: It can’t be so simple. I am told you don’t pay your taxes and the money so collected is black money.
Singhania: You may say so but money is money. When we get our money we save some for ourselves. Why should you call it black money?
Nehru: Alright, then, tell me what you do with that money. Who do you give such money to?
Singhania: I don’t keep accounts of such money because it is all spent in the family for good causes.
Nehru: But who do you give such money to?
Singhania: I don’t think you want to know about the money that I give to the Congress party…
Nehru: No, no. Not that.
Singhania: And, of course, you are not talking about the money that I donate to Bapu…
Nehru: Leave that.
Singhania: And not what I give to Vijaya (Nehru’s sister, Vijaya Lakshmi Pandit) whenever she needs some…
Nehru: Leave that.
Singhania: And as for what I used to send to Indu when she and Feroze were in Lucknow…but they are family, you know.
Nehru: That’s different…who else? I mean who have you given really big money… a big, big amount.
Singhania: If you are talking of a big amount, then the biggest I think I gave was some diamond jewellery and some big cash tucked under some fruit in a birthday dali (gift basket) to Lady Mountbatten on her birthday… At this, Nehru pounded the table and growled, “Shut up! You can’t say such a thing about her! Not her. Go away!”
However, this and similar encounters did not deter Nehru from his resolve to call in Kaldor, though his colleagues and the bureaucrats of the time ensured that the Cambridge economist’s efforts to radically reform the Indian taxation system or curb black money remained on paper. Kaldor’s survey report was buried amid paperwork. And Nehru, finding himself waging a lonely battle, recommended Kaldor to Sri Lankan Premier Dudley Senanayake and saw him off to Colombo.

So, corruption is not peculiar to India. Every other country suffers from graft to a limited or large extent. That is what Indira Gandhi used to tell us whenever the press, the people or the Parliamentarians howled about increasing corruption in public life. “There is corruption everywhere,” she would tell the nation. That might not have satisfied the people at large but there was something in the remark that made some people ponder.
Every other country suffers from graft to a limited or large extent. That is what Indira Gandhi used to tell us whenever the press, the people or the Parliamentarians howled about it.

YET, corruption tormented the people so much even then that a spark in Gujarat in 1974 soon led to such a conflagration that she had to eventually put the entire country under Emergency rule when, even on losing a court case, she refused to step down from office. Her refusal was seen throughout the country as an arrogant defiance of public opinion. If she bounced back to power within two years of the failure of the Janata Party coalition, it was only because those who had overthrown her were found to be utterly incapable of running a government. The people obviously chose order, stability, leadership and governance, and soon forgot all the talk of political corruption which had ousted her from office in the first place. If corruption was high under Mrs Gandhi, it was not invented by her. Allegations of corruption had become rampant long before Independence. Complaints against Ministers and Congress office bearers began reaching Mahatma Gandhi as early as 1937 when the first Congress Ministries were formed in several States after the election of 1936-37. By 1948, ie, within a year of Independence, Gandhi was writing to Sardar Vallabhbhai Patel and Jawaharlal Nehru that corruption had grown so much in some places that people were beginning to murmur that British rule, in this respect, had been better. Soon, the buzz about corruption exploded in major scams such as VK Krishna Menon’s Jeep scandal and the KD Malaviya-Sirajudin oil scandal.

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