3 weeks ago
JRD Tata vs Haksar: 1984 letters expose Licence Raj
In 1984, two very important men in India wrote letters to each other.
One man, PN Haksar, had been the top assistant to the country's leader, Indira Gandhi.
The other, JRD Tata, led a big business family.
Haksar asked Tata why Indian business people were not as successful as business people in Europe and Japan.
Tata answered that the government made it very hard for business by creating too many rules and very high taxes.
He said the rules helped dishonest people who cheated instead of hard-working business owners.
Haksar disagreed and said business leaders had lost their drive to modernise the country.
The article says the government's policies slowed India's economy for many years, giving examples like a steel factory that grew very slowly and a fertiliser project that was stopped because Tata's company was seen as too big.
Even a former communist like Haksar and a business leader like Tata could not agree on who was to blame.
Today, people still study these letters to understand India's economic history.
In a letter dated August 1, 1984, PN Haksar — former principal secretary to Prime Minister Indira Gandhi — asked JRD Tata why India's business class failed to measure up to counterparts in Europe and Japan.
Tata replied on September 26, 1984, blaming the licence-permit system and confiscatory taxation for penalising honest free enterprise while rewarding a new breed of bribers, tax evaders, and black marketeers.
Haksar countered that while Jamshedji Tata and others once urged modernisation, no such collective vision was visible among today's industrialists.
Tata said the industrial community spent decades fighting government constraints, citing a 1967 fertiliser plant proposal scuttled because Tatas were allegedly too big, while Tata Steel output grew only about 2% a year between 1950 and 1980.
Author Ashok Chowgule, vice-president of Vishwa Hindu Parishad, says the exchange drew little commentary after 1991, cites Jairam Ramesh's biography of Haksar, and blames policies pursued under Jawaharlal Nehru and PC Mahalanobis rather than business or culture.
- Who
- PN Haksar, former principal secretary to Prime Minister Indira Gandhi, and JRD Tata, head of the Tata business family.
- What
- An exchange of letters debating whether India's business class or the government's Licence Raj controls were responsible for slow economic growth.
- Where
- India (the correspondence concerned national economic policy).
- When
- August 1 to October 31, 1984.
- Why
- Haksar challenged the competence of India's business leaders; Tata argued restrictive state controls, not business, crippled the economy.
Haksar: government sound, business class lacking
Tata: state controls crippled enterprise
Blame for slow growth
Haksar: government sound, business class lacking
The government launched business-oriented policies from Independence, but leading Indian business people lacked the competence to use them for national growth.
Tata: state controls crippled enterprise
Licences, all-pervasive controls, and confiscatory taxation penalised honest free enterprise and rewarded bribers, tax evaders, and black marketeers.
Modernisation vision
Haksar: government sound, business class lacking
Industrialists like Jamshedji Tata once urged modernisation, but no such collective vision exists among current business people.
Tata: state controls crippled enterprise
The industrial community spent roughly 30 years struggling to overcome constraints, limitations, and delays imposed by government economic policies.
Who should face blame for failure
Haksar: government sound, business class lacking
Blame for low growth rested on cultural or competence shortcomings among the people, as in the 'Hindu rate of growth' framing.
Tata: state controls crippled enterprise
Ill-conceived government policies suppressed projects such as Tata's 1967 fertiliser plant and held down Tata Steel's growth to about 2% a year.
Key facts
- Event
- 1984 letter exchange between JRD Tata and PN Haksar on India's economic policy
- Opening letter
- PN Haksar to JRD Tata, August 1, 1984
- Tata's reply
- September 26, 1984
- Haksar's role
- Principal secretary to Prime Minister Indira Gandhi (1967-1973)
- Tata's position
- Head of the Tata business family
- Tata Steel output
- 1 million tonnes (1950) to 1.8 million tonnes (1980), about 2% annual growth
- Public sector steel by 1980
- Four greenfield plants producing about 5.0 million tonnes combined
- Article author
- Ashok Chowgule, vice-president of Vishwa Hindu Parishad (Firstpost opinion)
Quotes
JRD Tata
Indian industrialist, head of Tata Group
“”
firstpost.com
Sources
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