Powerful People Pay a Few Lakhs and Go Free: Indira Gandhi

Published: 10th May 2015 06:00 AM  |   Last Updated: 10th May 2015 10:57 AM   |  A+A-

NEW DELHI: The declassified files on action against black money during the Indira Gandhi period reveal  power play and inconsistencies. Perturbed by the JP movement’s growing velocity and criticism of her government for not acting against the big fish mounting, Indira Gandhi on August 24, 1974  wrote (Black Money -File no. 37 (465)/ 74 PMS] to all chief ministers: “In the public mind and in Parliament, there is a feeling that action tends to be against only petty traders and small shopkeepers. The purpose of this letter is to suggest more selective action against bigger people, as this would have an immediate and salutary effect upon the market. It is equally necessary to ensure that action taken in this regard is adequately publicised,” the letter stated.

Powerful2.jpgShe wrote “every now and then the question of punishment to hoarders and blackmarketeers comes up in Parliament and we are accused of not arresting the bigger people even when they are caught.”

“Some Members of Parliament who met me a few days ago alleged that such people even when arrested are released after paying a fine of few lakhs, which is no hardship to them. I do not know if there is any truth in this, but I think you should keep in touch with the situation.”

It is a historical fact that many leading smugglers were rounded up by the Indira government and put behind the bars but no big industrialist or businessman was seriously disturbed.

The three Black Money Files” (– 37 (465)/71 PMS, 37 (465)/72 PMS and 37 (465)/74 PMS) accessed by The Sunday Standard reveals the Indira government had come under heavy shelling on non-action against black money, smuggling and black-marketing. However, the files released have many missing links, which do not reveal any action taken, the involvement of the Finance Ministry and the role of the law-enforcement agencies.

Powerful3.jpgThe government had invited suggestions from ministers and MPs on how to combat the black money menace. On 26 June 1972, Congress leader and Gujarat’s Deputy Minister for Civil Supplies and Housing, Somjibhai Damor wrote to Mrs Gandhi: “On an appointed day every individual should be visited by a government servant and he should be asked to declare in duplicate the amount of cash held by him. The next morning the amount so declared should be allowed to be exchanged for new currency which would meanwhile have been sent to various banks and treasuries camouflaged as ballot papers.” PMS official G.Ramachandran, in an internal note dated 29 June 1972, told the prime minister that Somjibhai’s suggestion was unfeasible. “Of the four schemes outlined by him, the last one which refers to utilisation of black money for investment in backward areas is clearly not acceptable as it would amount to condonation of tax evasion,” Ramachandran wrote. Mrs Gandhi was skeptical of her party member’s idea and told him that she would get it examined first. “I appreciate the trouble you have taken to study this problem (curb the flow of black money) and formulate detailed suggestions to deal with it but I am not sure whether it would be administratively feasible to implement these schemes,” Indira wrote on July 10, 1972. Two years later, months before her letter for ‘selective action’ was issued, on 4 June 1974, the Minister for Heavy Industry, TA Pai told her that money has no complexion. “It is neither white nor black,” he stated.While pointing out details of black money sector-wise, Pai churlishly restrained himself from any advice.

“I have deliberately not made any suggestions as if they are not implemented fully or in a half-hearted manner as it happened last year with the rate hike after discussions in your room, without taking consequential steps immediately with a definite goal in view, since half-hearted measures will perhaps do more damage,” pai wrote. He observed that smugglers, Indian agents of East European countries, foreign funds for political purposes, industries, businesses and the agricultural sector of the country are all responsible for generating black money. Pai was of the view that the income generated by the agriculture sector and masquerading as agricultural income is primarily money lending. “Even as far back as 1962 it was estimated as Rs 1,600 crore generating an income of not less than Rs.200 to Rs 300 crores per year masquerading as agricultural income and escaping taxes completely.”

This first lot of declassified files on black money reveal that even after 40 years when ‘selective action’ was initiated by the Indira regime to curb the menace, successive governments, including ones led by the Congress shied away from taking decisive action. The Modi government which plans to inroduce the Anti-Black Money Bill in the ongoing session of Parliament, too, seems to have misjudged the extent of penetration and power of those ‘selective bigger people’ responsible for generating and stashing the country’s wealth abroad.

Surreal Suggestions

“The currency has no complexion. It is neither white nor black. It changes its complexion... depending upon the manner in which it is used.”

TA Pai, Minister for Heavy Industry

“On an appointed day every individual should be visited by a government servant and should be asked to declare in duplicate the amount of cash held by him. The next morning, the amount so declared should be allowed to be exchanged for new currency which would meanwhile have been sent to various banks and treasuries camouflaged as ballot papers.”

Somjibhai Damor Gujarat minister


After the Congress under Indira swept the 1971 general elections, the party MP from Visakhapatnam, Tinneti Viswanatham had in a letter dated March 17, 1971 reminded Indira to act against those generating ill-gotten wealth. On May 1, 1971, Mumbai based freedom figher and film director Vithal Jhaveri had written to the Prime Minister offering his services “to eradicate disease of black money and its cancerous growth.” Jhaveri offered his service for Rs 1 per year but demanded that his team that will form a Secretariat that “will be compensated out of the income of one per cent of the guaranteed minimum Rs 25 crores of extra revenue to the government accruing from undisclosed wealth sources, payable to me by way of honorarium and out of pocket expenses of self and secretariat.”

On May 21, 1971, Indira directed her Finance Minister YB Chavan to speak to Jhaveri. “I do not know what he has in mind. You may perhaps send for him and talk things over. It does seem to me that the problem of black money can only be tackled through some person who feels very strongly about it,” revealing her resolution to tackle the problem.

The only letter of Chavan available in the files is one dated June 4, 1971 and addressed to Indira Gandhi, which notes “Jahveri is a well- intentioned person, but I do not know to what extent he will be in a position to undertake the task about which he has written to you.”

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