Book review: India’s Finance Ministers: From Independence to Emergency (1947-1977)

Then Prime Minister Jawaharlal Nehru, shaking hands with one of the children who had come to see the Beating of the Retreat on January 29, 1957. Nehru served as India's finance minister thrice: in 1948, '56 and '58. Each time, his tenure as FM was less than 40 days. (Image source: Photodivision.gov.in)

The role of the finance minister, despite the visibility and the media attention, is not understood very well in India. There is a uniqueness to the way the finance minister operates within strictly political frameworks—and yet, somehow also transcending these frameworks and obligations to solve practical, large-scale economic problems. Often, the finance minister finds themselves fighting their own colleagues within the government, even directly contradicting the prime minister. They have to find the courage to say "this does not make economic sense", even when faced with a politically advantageous idea. It is a tightrope walk and certainly not meant for the faint-hearted. One only has to look at the last couple of decades to understand that the finance minister has one of the most unenviable, thankless jobs in all of India.

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A.K. Bhattacharya’s book India’s Finance Ministers: From Independence to Emergency (1947-1977) is an excellent starting point for readers looking to educate themselves on this vital part of Indian history. From the beginning, Bhattacharya wants the readers to be clear about one thing: “a central premise here is that finance ministers do not operate outside the realm of politics”. This important disclaimer out of the way, Bhattacharya proceeds to show us how India’s finance ministers over three decades till 1977—depending upon the context—either fought the dominant political ideas of their eras, or learned to adjust their own work accordingly.

Not that everything is dictated by partisanship, of course. In the first chapter itself, Bhattacharya tells us how R.K. Shanmukham Chetty was chosen as the first-ever finance minister by Prime Minister Jawaharlal Nehru, despite Chetty not being a Congress man.

“The choice of a non-Congress man as the first finance minister for the newly independent country also reflected the maturity and non-partisan thinking of Gandhi and Nehru. They chose someone they thought was the most qualified for the role, irrespective of his political affiliations or indeed his economic or political views. They needed a man who could represent India on economic policy matters on international platforms with competence and conviction.”

How did India arrive at its current taxation policy? How did we incentivize multinationals operating in India to share their profits with Indians? How did the socialist outlook of Nehru and Co. work alongside the free market impulses of someone like a Morarji Desai? These are just some of the fascinating questions answered by Bhattacharya’s book, which draws upon existing history books, speeches in the public record and other journalistic/scholarly sources to make its point.

Another advantage of Bhattacharya’s politics-inclusive approach is that it allows us to look at (and possibly, assess) the various political figures of the past from the eyes of those outside of the system. For example, C.D. Deshmukh was the first-ever former RBI governor to be appointed the finance minister.

Then finance minister C.D. Deshmukh glancing through the 1954-55 Union Budget, before its presentation to the Parliament in New Delhi on February 27, 1954. (Photo: Ministry of Finance via Wikimedia Commons)

And Bhattacharya dives into Deshmukh’s autobiography to fish out this gem of a passage where Deshmukh astutely compares Nehru and Patel and their respective working styles: “At the core of Vallabhbhai’s realism was the recognition of the foibles of human nature and an awareness of its limitations, which stamped him as a conservative. Nehru, unsure as a judge of men, was inclined to overestimate the achievement potential of his fellow beings; he was in consequence only too ready to respond to the appeal of socialism. The Nehru-Patel balance in the Cabinet was therefore a case of unstable equilibrium, maintained only by a common effort on either side not to encroach on each other’s assigned territory.”

The dominant mode for much of India’s Finance Ministers is one of unhurried, thorough storytelling. Bhattacharya is content to let this remarkable roster of individuals speak for themselves. But occasionally, he allows the book to slip into a more cinematic avatar, recounting high-tension scenes with more than a flourish. The passage below, for example, recounts how the rupee was untethered from the pound sterling back in 1975; note the foreshadowing and the cinematic flourish of the ‘theek hai’.

“Even before Narasimham could finish his explanation, the prime minister asked whether the new system would lead to devaluation of the Indian currency. This was a politically loaded question. (Indira) Gandhi had to face a political backlash after the devaluation of the Indian rupee in 1966 and she was careful to avoid a repeat of that. Narasimham explained that there would be no devaluation and it was most likely that the Indian rupee would actually appreciate vis-à-vis the sterling. Gandhi nodded her head and said ‘Theek hai’, according to Narasimham.”

India’s Finance Ministers has something for every kind of reader, whether they are newcomers or experienced students of Indian history. For this, and for the several other reasons outlined above, it is an essential addition to your bookshelf.

T.T. Krishnamachari, Union Finance Minister, presiding over the States’ Finance Ministers’ Conference in New Delhi on November 18, 1957. Shri Govind Ballabh Pant, Union Home Minister is also seen at extreme right of Members of the Planning Commission were also present at the Conference. (Photo Studio/November, 1957/RDL, 13/6/17; Goi via Wikimedia Commons)

India’s Finance Ministers: From Independence to Emergency (1947-1977) by A.K. Bhattacharya - Penguin Business - releases on May 22, 2023.