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In the fourth part in the se­ries on cor­rup­tion in mod­ern In­dia, Alam Srini­vas ex­plores the links be­tween busi­ness and pol­i­tics in the pre-In­de­pen­dence era. These con­nec­tions were ide­o­log­i­cal (per­son­ally in­ti­mate) and na­tion­al­ist (pro­fes­sion­ally ben­e­fi­cial), but also con­tro­ver­sial, con­tentious and para­dox­i­cal. Politi­cians and in­dus­tri­al­ists helped each other, but also clashed on some is­sues

TO­DAY, a whiff of crony cap­i­tal­ism, i.e. a politi­cian help­ing a busi­ness­man or vice versa, re­sults in a scan­dal. But in the pre-In­de­pen­dence era, when In­dia and In­di­ans fought for free­dom from the Bri­tish Raj, there was no such stigma and pu­trid­ity at­tached to such con­nec­tions. Busi­ness­men openly rubbed shoul­ders with politi­cians, and the lat­ter pub­licly walked with the for­mer. In­dus­tri­al­ists funded the free­dom move­ment, and the na­tional lead­ers backed the for­mer in shap­ing Bri­tish’s eco­nomic and busi­ness poli­cies. How­ever, there were dif­fer­ences be­tween then and now. In cases a cen­tury or so ago, the politi­cians metic­u­lously kept the records of the funds re­ceived and dis­bursed. In fact, many of them in­sisted on giv­ing the de­tailed ac­counts to their busi­ness fi­nanciers. In ad­di­tion, while the politi­cians sup­ported busi­ness houses, they also clashed with them. It wasn’t a one way street all the way. Hence, it is im­pos­si­ble to ex­plain the nar­ra­tive as ei­ther the be­gin­nings of crony cap­i­tal­ism, or the mo­men­tum of na­tion­al­ist fer­vour. One can tell this un­be­liev­able story through sev­eral char­ac­ters. But it is eas­ier to do so with a few of them – Ma­hatma Gandhi, Sir Ratan Tata and JRD Tata, GD Birla, and Jam­nalal Ba­jaj. The first was the most im­por­tant politi­cian be­tween 1915, after his re­turn from South Africa, and 1948, and the other four rep­re­sent the three lead­ing busi- ness houses. The in­ter­ac­tions be­tween them re­veal the ex­tent of the ben­e­fits they doled on each other, re­spect they had for each other, and the bat­tles they fought with each other. Gandhi’s fi­nan­cial con­tacts with In­dian com­pa­nies be­gan when he still in South Africa, fight­ing for the cause of In­di­ans against the racial apartheid regime. In Au­gust 1925, on a visit to Jamshed­pur, where the Tata’s steel mill was lo­cated, he told the au­di­ence, “In South Africa when I was strug­gling along with the In­di­ans in the at­tempt to re­tain our self re­spect, it was Sir Ratan Tata who first came for­ward with as­sis­tance.” Sir Tata was the se­cond son of Jam­setji Nusser­wanji Tata, the founder of the Tata Group.

Let­ters be­tween Sir Tata and Gandhi, and ar­ti­cles by Gandhi flesh out the fund­ing pat­tern. Be­tween 1909 and 1912, Sir Tata do­nated at least ` 125,000 in three in­stal­ments to Gandhi’s Natal In­dian Congress. In De­cem­ber 1909, Gandhi wrote in In­dian Opin­ion, a news­pa­per he launched in South Africa, that Tata’s gifts rep­re­sented the Parsi gen­eros­ity and In­dia “has been roused” by his African cause. In Jan­uary 1910, Sir Tata wrote, “I shall watch the progress of the strug­gle with great in­ter­est....” He hoped that the “brave ef­forts” would “soon be crowned with the suc­cess they de­serve”. Once he re­turned to In­dia, the Tata Group con­tin­ued to fund Gandhi and the In­dian Na­tional Congress (Congress Party). Be­tween the 1920s and 1940s, there were con­tin­u­ous al­le­ga­tions that the Tata Group gave money to the Congress to or­gan­ise mass move­ments and fight the elec­tions for the cen­tral leg­isla­tive as­sem­bly and provin­cial coun­cils. There were scores of other busi­ness houses, like Birla and Ba­jaj, who did the same. Even the busi­ness­men in South In­dia had deep friend­ship with Gandhi.

MONEY wasn’t re­quired only for the move­ments. Gandhi’s ex­tra­or­di­nary life­style had to be fi­nanced too. Ac­cord­ing to B.R. Nanda, a Gandhi bi­og­ra­pher, “One of her (Saro­jini Naidu) oft-quoted, and mis­quoted re­mark was, “It costs a lot of money to keep Gandhi in poverty.” Mo­ham­mad Ali Jin­nah, Pak­istan’s first premier, said that although he trav­elled in first class in train, and Gandhi in third class, he spent less on his tours. This was be­cause of Gandhi’s “gi­ant en­tourage”, as de­scribed by au­thor Pa­trick French. Apart from pro­vid­ing cash for party and other ac­tiv­i­ties, G.D. Birla was Gandhi’s per­sonal banker. Let­ters be­tween the two, and by Ma­hadev De­sai, Gandhi’s per­sonal sec­re­tary, high­light the nitty-gritty de­mands that the busi­ness­man catered to. For ex­am­ple, Birla sup­plied sev­eral com­modi­ties like dates, honey and car­pets for Gandhi and his ashram. In a De­cem­ber 1936 let­ter, Gandhi men­tioned to GD, “Dates

ar­riv­ing reg­u­larly. The woollen car­pet, which is quite warm, has also ar­rived.” In April 1942, De­sai com­plained to Ba­jrang Puro­hit (GD’s sec­re­tary) that Birla had promised 20 pounds of honey for Gandhi, and 40-50 pounds for the Ashram, but now only the for­mer quan­tity was be­ing sent. He added that if this was the case, he would have to “sur­ren­der the en­tire quan­tity (20 pounds) to the Ashram”. Pat was the re­ply, “It just slipped from Ghan­shyam­dasji’s mem­ory that he had promised 40-50 pounds for the Ashram. Any­way 50 pounds of honey will be on the way presently.” One of GD’s bi­og­ra­phers, Atu­lanand Chakrabarti, es­ti­mated that Birla paid ` 50,000 a year for sev­eral years for the run­ning of Gandhi’s Wardha Ashram. Gandhi made re­quests to Birla to fi­nan­cially sup­port his me­dia ven­tures, like Young In­dia and Navji­van, and also pro­vide money to buy books, other lit­er­a­ture, and pe­ri­od­i­cals (in­clud­ing for­eign ones). The Ma­hatma urged the mil­lion­aire to sup­port the for­mer’s per­sonal causes. In 1936, Rabindranath Tagore, No­bel Prize win­ner, was on a whirl­wind tour to raise money for Viswa Bharti at Shan­tinike­tan. Gandhi was ex­tremely un­happy that the 75-year-old Tagore had to make these ef­forts for a mere ` 60,000. He im­me­di­ately sent a mes­sage, ac­cord­ing GD’s bi­og­ra­pher, MN Juneja, to Birla that six rich peo­ple should do­nate ` 10,000 each. It comes as no sur­prise that the mil­lion­aire fur­nished ` 60,000 him­self, and to give re­spect to Tagore, in­sisted that it be a “se­cret do­na­tion”. Juneja wrote that GD was Gandhi’s “em­ploy­ment bureau”. The busi­ness­man gave cash and jobs to the Ma­hatma’s rel­a­tives, friends, and ac­quain­tances. He would re­ceive weird re­quests. When Jaiprakash Narayan’s mother died, Gandhi asked Birla to help with money. When one Sharma from Khurja”, who was a natur­opath, wanted to visit Europe for 18 months, Gandhi wrote to Birla, “I feel like fi­nanc­ing his trip and stay abroad from the money you promised me for this year.” It’s un­clear whether GD sent an ex­tra amount. Some en­trepreneurs, who pro­vided funds for the Congress and politi­cians’ per­sonal uses, worked as trea­sur­ers of the party. A lead­ing ex­am­ple was Jam­nalal Ba­jaj, who was the trea­surer for al­most two decades in the 1920s and 1930s. He was hand­picked by Gandhi. Ba­jaj played a lead­ing role in the fund col­lec­tions for the All In­dia Ti­lak Memo­rial Fund, and money dis­burse­ments for the pop­u­lar­i­sa­tion of khadi.

NANDA wrote that in March 1921, the Congress de­cided to raise ` 10 mil­lion for the Ti­lak Fund within three months. Both the fig­ure and time pe­riod were the brain­child of Gandhi. Ba­jaj was one of the ten cho­sen ones, who were al­lot­ted quo­tas to be col­lected from spe­cific prov­inces. As a trea­surer, he also had to en­sure that the over­all tar­get was achieved. By June 15, 1921, only about ` 4 mil­lion was do­nated to the fund. Ba­jaj was des­per­ate; an­other ` 6 mil­lion had to come in just over two weeks, by June 30. On June 14, he wrote to Seth Govind Das, a rich Mar­wari in Ja­balpur, that the only work­able so­lu­tion to meet the tar­get, as in­sisted by Gandhi, was to dis­trib­ute sixty shares of ` 100,000 each to wealthy in­di­vid­u­als. Ba­jaj added, “I think your name should be in­cluded in the list of re­spon­si­ble in­di­vid­u­als who will be charged with the col­lec­tion of the money.” For­tu­nately, a col­lec­tion over­drive brought in ` 3.6 mil­lion from Bom­bay, and an­other ` 2.4 mil­lion from Gu­jarat over the next two weeks. A short­fall of ` 200,000 was equally shared by Ba­jaj and Umar Shob­han, wrote Nanda. How­ever, through­out his po­lit­i­cal ca­reer, Gandhi, ac­cord­ing to Nanda, “at­tached the great­est im­por­tance to the col­lec­tion and dis­burse­ment of pub­lic funds”. He be­lieved that “a pub­lic fund was pub­lic prop­erty”, and ev­ery mem­ber of the pub­lic, in­clud­ing the non-donor, was “en­ti­tled to know how the fund was dis­bursed”. In his au­to­bi­og­ra­phy, Gandhi wrote about how he put the fi­nances of Natal In­dian Congress on a “strong foot­ing”. “I dare so,” he wrote in 1926, “the ac­count books for the year 1894 can be found in­tact even to­day in the records of the Natal In­dian Congress.” After he re­turned, ac­count­ing be­came crit­i­cal for the Congress in In­dia. The rea­son: un­til 1919, the Congress de­pended on in­di­vid­u­als to raise ` 30,000-50,000 to hold its an­nual ses­sions. Thanks to Gandhi, the col­lec­tion soared. In 1919, the Congress raised ` 700,000 to ac­quire Jalian­wala Bagh, and an­other ` 200,000 was sent for the re­lief of the suf­fer­ers in Pun­jab. In 1921, as men­tioned ear­lier, ` 10 mil­lion was col­lected for the Ti­lak Memo­rial Fund, and such fig­ures in­creased in the 1930s and 1940s. Later, when Gandhi was ques­tioned about the dis­burse­ment from this fund, he could con­fi­dently an­swer that the ac­counts were pub­lished by the Congress, and the au­dited fig­ures were avail­able with the trea­sur­ers and gen­eral sec­re­taries of the party. Gandhi wanted ev­ery ci­ti­zen to have ac­cess to them. Even in the case of in­di­vid­u­als, be it GD or Tata, the Ma­hatma in­sisted on giv­ing the mil­lion­aires a com­plete bal­ance sheet of how much money was given, and how much was spent and where. Reg­u­larly, he handed over papers with the ac­counts to GD, who re­fused to ac­cept them, or tore them in­stantly. The mil­lion­aire had to­tal faith in the Ma­hatma. So was the case with

other busi­ness­men, in­clud­ing Sir Ratan Tata and Ba­jaj. There can be no doubts to­day that the politi­cians helped the in­dus­tri­al­ists in sev­eral cru­cial pol­icy is­sues. In her bi­og­ra­phy of GD, Medha Ku­daisya men­tioned sev­eral such in­stances over a cou­ple of decades. It is worth­while to men­tion two such ex­am­ples – one that helped the en­tire In­dian busi­ness com­mu­nity, and the other that ben­e­fit­ted a sin­gle In­dian com­pany. They do in­di­cate that the politi­cians were will­ing to be seen as sup­port­ers of spe­cific busi­ness­men, which would be dubbed as crony cap­i­tal­ism to­day. In­dian busi­nesses clashed with Bri­tish rulers on the ex­change rate be­tween the ru­pee and ster­ling. The for­mer felt it was skewed against the in­ter­ests of the In­dian ex­porters, and prof­ited the Bri­tish im­porters. As Ku­daisya wrote, “Big busi­ness suc­ceeded in con- vinc­ing the na­tion­al­ist lead­er­ship that the cur­rency ques­tion was not merely a cap­i­tal­ist ag­i­ta­tion, but af­fected the com­mon peo­ple. Birla wrote to Gandhi claim­ing... (it) would help `agri­cul­ture... vil­lage crafts­men, such as chamars, pot­ters, herds­men and other pro­duc­ers while it will go against bankers, se­cu­rity hold­ers, and money-lenders.’”

Afew times, the politico-busi­ness com­bi­na­tion proved al­most suc­cess­ful on the cur­rency ex­change rate is­sue. In 1927, when the Cur­rency Bill was tabled in the In­dian cen­tral leg­isla­tive as­sem­bly, “po­lit­i­cal lead­ers from di­verse shades of the spec­trum such as (Madan Mo­han) Malviya, Srini­vas Iyen­gar, Jin­nah, and Jam­nalal Me­hta con­demned the bill”. The In­dian busi­ness­men and politi­cians in the as­sem­bly voted as a bloc, and the “gov­ern­ment man­aged to pass the bill with a very nar­row mar­gin”. For the In­dian busi­ness, an­other con­tentious is­sue was that of im­pe­rial pref­er­ence, i.e. a lower im­port duty on prod­ucts from Bri­tain, as com­pared to those from other coun­tries. When it came to tex­tiles, the na­tion­al­ist lead­ers and busi­ness­men ar­gued for higher duty on Bri­tish goods. This was men­tioned as the sev­enth of the 11 de­mands be­fore Gandhi em­barked on his fa­mous Salt March. (The se­cond de­mand was the ster­ling rate.) Im­pe­rial pref­er­ence, in sev­eral cases, turned out to be against a spe­cific and sin­gle In­dian com­pany. Let us take the ex­am­ple of steel pro­tec­tion. In In­dia, the steel in­dus­try was “syn­ony­mous” with Tata Group. So, any com­bined and vo­cif­er­ous ar­gu­ment for higher duty on Bri­tish steel im­ports would di­rectly help a sin­gle In­dian com­pany. How­ever, as Ku­daisya said, the busi­ness com­mu­nity

Be­tween the 1920s and 1940s, there were con­tin­u­ous al­le­ga­tions that the Tata Group gave money to the Congress to or­gan­ise mass move­ments and fight the elec­tions for the cen­tral leg­isla­tive as­sem­bly and provin­cial coun­cils

got to­gether on such is­sues, and “suc­cess­fully ral­lied the sup­port of na­tion­al­ist politi­cians for their po­si­tion”. The Ma­hatma helped the mil­lion­aires on op­er­a­tional is­sues, i.e. the man­age­ment of their com­pa­nies. Ac­cord­ing to RM Lala, a bi­og­ra­pher of J.R.D. Tata, the Tata Group was be­sieged by sev­eral trade union strikes in the 1920s after the suc­cess­ful Rus­sian Rev­o­lu­tion. In 1924, “Ma­hatma Gandhi came with Ra­jen­dra Prasad and C.F. An­drews (a Gandhi loy­al­ist from South African days) to set­tle the strike”. Fi­nally, a dis­missed gen­eral man­ager was re­in­stated, and work be­gan after An­drews was ap­pointed the union’s pres­i­dent. Gandhi in­ter­vened in the busi­ness­men’s sen­si­tive per­sonal is­sues. When the Birla clan was ex­com­mu­ni­cated by the Maheshwari Pan­chayat in Cal­cutta be­cause of GD’s el­der brother, Ramesh­war­das’ (a wid­ower) mar­riage to a girl be­long­ing to Kol­warMa­hesh­wari (a sup­pos­edly lower caste), GD turned for ad­vice to Gandhi and Malaviya. From both he turned for ad­vice and so­lace. Both urged GD to po­litely put for­ward his ar­gu­ments be­fore the Mar­wari Pan­chayat, but ac­cept what­ever de­ci­sion is taken by it.

DE­SPITE the bon­homie and re­spect be­tween the politi­cians and busi­ness­men, they bat­tled over sev­eral is­sues. One of the bit­ter ones hap­pened in 1945, after the Bri­tish regime de­cided to un­of­fi­cially send a del­e­ga­tion of In­dian busi­ness­men on a trip to Eng­land and the US after the end of World War II. The idea was to en­able the In­di­ans to un­der­stand the in­dus­trial or­gan­i­sa­tions in the West, tech­no­log­i­cal ad­vances, and the post-war sce­nario. The gov­ern­ment had nei­ther ref­er­ence nor con­trol over it. Gandhi cas­ti­gated the in­dus­tri­al­ists who were about to leave. On May 6, 1945, he told his au­di­ence, “The in­de­pen­dence will not come for the ask­ing. It will come when the in­ter­ests, big or small, are pre­pared to forego the crumbs that fall to them from part­ner­ship with the Bri­tish in the loot which Bri­tish rule takes from In­dia.” He con­tinue that the “un­of­fi­cial del­e­ga­tion... dare not” en­ter into a “shame­ful deed” with the Bri­tish as long as Con­gress­men were “de­tained with­out trial for the sole rea­son of sin­cerely striv­ing for In­dia’s in­de­pen­dence with­out shed­ding a drop of blood save their own”. In­stead of turn­ing the other cheek, the Ma­hatma’s over­bear­ing slap echoed through In­dia. It shocked JRD and GD as both were part of the trip. The lat­ter tele­grammed Gandhi on May 7: “I am very much pained and I refuse to be­lieve that you could have given a pub­lic ex­pres­sion of distrust in the bona-fide of my­self, Tata and Kas­turb­hai (Lalb­hai) whom you have so well known.” JRD sent his let­ter the next day, “I can­not tell you how un­happy I was by the views you ex­pressed about our trip and by the

strong lan­guage you used.” A press state­ment by JRD clar­i­fied that there were no “shame­ful deeds”, and the mem­bers were trav­el­ling at their own ex­penses. The idea was to “gain knowl­edge and ex­pe­ri­ence abroad” in a bid to play a bet­ter role in In­dia’s fu­ture de­vel­op­ment. On May 20, Gandhi clar­i­fied in a philo­soph­i­cal re­tort, “If you have all gone, not to com­mit your­self to any­thing, my note pro­tects you. My an­swer is to the hy­po­thet­i­cal ques­tion. If the hy­poth­e­sis is wrong, then nat­u­rally the an­swer is wrong and there­fore it is pro­tec­tive of you all.” On sev­eral oc­ca­sions, the Ma­hatma took on the In­dian mill own­ers who, tak­ing ad­van­tage of khadi’s pop­u­lar­ity, pitched their pro­duce as mill-spun khadi, and sold it at cheaper prices than the hand-made one. Gandhi main­tained that mill-spun khadi wasn’t khadi, and the in­dus­tri­al­ists lied to the pub­lic about it. The lat­ter were more wor­ried about their prof­its. Birla tried to con­vince the Ma­hatma that mill– made cloth had the po­ten­tial to re­place for­eign cloth.

TNanda wrote that in March 1921, the Congress de­cided to raise ` 10 mil­lion for the Ti­lak Fund within three months. Both the fig­ure and time pe­riod were the brain­child of Gandhi. Ba­jaj was one of the ten cho­sen ones, who were al­lot­ted quo­tas to be col­lected from spe­cific prov­inces

HE mu­tu­ally-ben­e­fi­cial and some­times-re­tal­ia­tory re­la­tion­ships be­tween the politi­cians and busi­ness­men led sev­eral aca­demics and re­searchers to con­tra­dic­tory con­clu­sions. Some said that the politi­cians ex­ploited the busi­ness­men, and vice versa. Thus, the politi­cians felt that easy money would help them to gain in­de­pen­dence faster, and emerge as na­tional icons. The busi­ness­men felt that they could com­bat their en­trenched Bri­tish com­peti­tors bet­ter with the sup­port of the na­tion­al­ist lead­ers. Oth­ers be­lieved that greed, ma­te­rial wealth, prof­its, suc­cess, and per­sonal am­bi­tions weren’t im­por­tant in such asso­ciations. They were more re­lated to ideas such as re­spect, friend­ship, men­tor­ship, spir­i­tual en­light­en­ment, and moral high ground. Both the politi­cians and in­dus­tri­al­ists had com­mon aims, and they as­sid­u­ously, coura­geously, and with a na­tion­al­ist fer­vour, joined hands to win free­dom for them­selves and coun­try­men. Theirs was a larger, more uni­ver­sal cause; the means jus­ti­fied the ends. Be­tween these two ex­treme po­si­tions would lie a more rel­e­vant ground. A few re­searchers ar­gued that both the politi­cians and busi­ness­men played sev­eral games at the same time. Big busi­ness used na­tion­al­ist pol­i­tics to put pres­sure on Bri­tish gov­ern­ment, and then ne­go­ti­ate a few ben­e­fits from the rulers. Na­tion­al­ist pol­i­tics used big busi­ness for money that could en­sure mass move­ments to take in­cre­men­tal and gi­ant steps towards free­dom. As Sir Pur­shot­tam­das Thakur­das, a lead­ing in­dus­tri­al­ist, said, “We can no more sep­a­rate our pol­i­tics from our eco­nomics than make the Sun and the Moon stand still.”

Ma­hatma Gandhi

Sir Ratan Tata

GD Birla

JRD Tata

Jam­nalal Ba­jaj

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