Opinion A storm of protest

Indira Gandhi’s decision to devalue the rupee in 1966,as Lal Bahadur Shastri had intended to do,was controversial

On June 6,1966,less than six months after coming to power,Indira Gandhi announced a 35 per cent devaluation of the rupee and courted much greater and deeper trouble than at any time until then. The word “tsunami”,not in vogue at that time,would have been an appropriate description of the storm of protest that greeted her. Several newspapers reported the next morning that as soon as the announcement was made on All India Radio at 9 pm,“all hell broke loose”. The devaluation,most Indians believed,was the “ultimate” in her “sell-out to America”. (Some numerologists said later that the combination of the sixth day of the sixth month of the 66th year of the century was “manifestly ominous”.) There was exquisite irony in this,however. For,while Indira Gandhi did carry the can,the decision to devalue the rupee was all but taken in the time of Lal Bahadur Shastri. But he could not announce it before leaving for Tashkent for peace talks with President Ayub Khan of Pakistan under Soviet auspices on January 3. This happened because it was only on the last day of 1965 that he could ease out then Finance Minister T.T. Krishnamachari (better known as TTK),who was stoutly resisting devaluation. Shastri’s trusted advisers—his secretary,L.K. Jha,the governor of the Reserve Bank,P. C. Bhattacharya,and the ambassador to the United States,B.K. Nehru — had persuaded him much earlier that devaluation was good for India. They had also told him bluntly that until TTK was sacked,there could be no devaluation. During the early part of her career as prime minister,Indira Gandhi’s grasp of economic issues was virtually non-existent. In fact,she once told a press conference that the two greatest economic problems before the country were “inflation and rising prices”. The press corps had laughed indulgently. On devaluation,therefore,she was guided by the same advisers that she had inherited room Shastri. This ime round,however,these officials had the crucial support of two politicians the prime minister liked: agriculture minister C. Subramaniam,and deputy chairman of the Planning Commission,Asoka Mehta. Finance Minister Sachin Chaudhuri,appointed by Shastri after ousting TTK,was an eminent lawyer and a man of impeccable manners. But in economics and finance,he was illiterate. He,therefore,did whatever he was told. At 9.30 pm on June 6,he made a broadcast to the nation justifying evaluation. It was written by others and the text was handed to him an hour earlier. All discussions on the subject were held in such strict secrecy that the cabinet was informed of it only at the eleventh hour. Only Manu bhai hah,the highly competent minister for foreign trade,dissented. All others duly fell in line. At this late stage,it occurred to Indira Gandhi thats he must consult the powerful Congress president,K.Kamaraj. When he came and was told what as afoot,he hit the ceiling. This was the first grim warning she received about what she had landed herself into.

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Somewhat shaken,she even thought of “postponing” the decision,but discovered that her second thoughts were too late. The IMF had already been notified. Referring to all this,a top finance ministry official said to me a few months later: “I don’t know why you people made so much fuss. It was a matter handled by two Gujarat is,using just one word of their language. From Washington,J.J. Anjaria,India’s executive director at the IMF,rang and asked ‘Barobar?’ From Delhi,the chief economic adviser,I.G. Patel,replied ‘Barobar’,and the deed was done.” In Parliament,the left,right and centrists on opposition benches united to condemn the devaluation of the rupee. Many members on the government benches silently agreed with them. In those days,disruption of parliamentary proceedings was unheard of. Members did get highly agitated over some issues,but they expressed themselves with due decorum. The scene over devaluation was unprecedented. Member after member in the opposition got up,made a short statement about how appalled he/ she was over the Indira Gandhi government’s “sellout” and staged a walkout. Even from the treasury benches,there

was little support for devaluation. As for the public mood,it was almost as hostile to the government as just after the 1962 debacle. Within the Congress party,an incensed Kamaraj continued to lead the campaign against devaluation. Many overheard him muttering: “A great man’s daughter; a small man’s mistake.” This was his way of blaming himself for having made her prime minister in the first place. Yet,he strongly discouraged those Congress MPs that wanted Indira Gandhi removed from leadership.

Elections were due soon,he told them,and it would be dangerous to divide the party.

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For her part,Indira Gandhi convinced herself that from being her ally,the Syndicate had become her enemy. But she was also conscious that she was in no position to take on the powerful party bosses. However,her mind was made up. She had to wait for the opportunity to destroy the Syndicate before it destroyed her.

While she publicly defended devaluation,privately she acknowledged that she had been “taken for a ride”. Her advisers had misled her,and the Americans had let her down. The $900-million-a-year aid package had failed to materialise. She had assured the people that the aid she had accepted was without strings. People now jeered that she was stuck with “strings without aid”. This made her angry,but much the greater was her fury against the “perfidy” of her confidants and counsellors. Having been an insecure,even paranoid,person

since her childhood,she was now determined not to trust anyone. Mehta and Subramaniam were the first to feel the cold blast of her distrust and disdain. Subsequently,rare was a confidant that did not eventually fall from grace. Far more significant and far-reaching was her second resolve. After deep thought,she came to the conclusion that her political survival depended on reversion to old,left-leaning politics,and a revival of her mildly radical image.