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Indian Express
2 days ago
- Business
- Indian Express
A new biography of John Matthai discusses his policy contributions in the early years of independent India
John Matthai played a significant role in shaping government economic policies at the dawn of Independence but it has taken more than 60 years since his death for a definitive biography on the respected Syrian Christian economist, academician and technocrat. Matthai would have been pleased at the choice of his biographer, Bakhtiar Dadabhoy, who brings a thoughtful, research-oriented and measured approach, reflective of his subject. Matthai was a man for all seasons: India's first railways minister, the second finance minister, first chairperson of the State Bank of India, chairperson of the Taxation Inquiry Commission, vice chancellor of Bombay University and Kerala University, and a member of the Tariff Board pre-Independence, besides other significant positions. Matthai is probably best remembered today as the main author of the Bombay Plan of 1944, an action plan for economic development in independent India, underwritten by a few industrialists. He worked on it at the behest of JRD Tata, as Matthai had had a long and successful stint with the Tata group. He fitted in comfortably at the business house controlled almost exclusively in those days by the clannish Parsis. He even became the first non-Parsi chairperson of the powerful Sir Dorabji Tata Trust and was Tata chairperson JRD Tata's blue-eyed boy. His colleague, the witty Sir Homi Modi, joked about Matthai's characteristic solemnity — that even when he said, 'Good morning'' it sounded like a papal benediction. Matthai's years at Tata were his happiest, his several stints in government less serendipitous. The prickly, principled Matthai did not last very long in any post because of his intransigence and independence. His most famous fall-out was with Prime Minister Jawaharlal Nehru over the Planning Commission. Nehru, impressed by Matthai's wealth of experience in business, administration and academics, invited him to join the first cabinet as a representative of the Christian community. Matthai became railway minister. It was the worst possible time, World War II having weakened the economy and Partition having wreaked havoc. Matthai was given the thankless job of partitioning the railways between the two new countries in less than eight weeks. The railway minister was often at loggerheads with home minister Sardar Patel, who wanted to run more trains, while Matthai felt that the overriding priority for evacuation trains was for the Army and police to protect the trains carrying fleeing migrants. When India's first finance minister Shanmukham Chetty, Patel's choice, resigned, Matthai was appointed in his place. It was not a propitious start. Matthai's first budget was generally panned as being pro-rich and inequitable, with high postal hikes and levy on coarse cloth. He was also caught off-guard by the devaluation of the pound, taking at face value the British government's official assurance that the pound, to which the rupee was pegged, would not be demonetised. But it was Matthai's differences with Nehru which brought matters to a head. Nehru, inspired by Fabian Socialism and the Russian example, wanted direct control over the planning process. Though a student of the Fabian socialist Sydney Webb, Matthai, who had first-hand experience in the business world, was more concerned about conserving the economy, especially in view of the stringency of resources, rather than redesigning it. He apprehended that the Planning Commission would emerge as a parallel Cabinet with its deputy chairman exercising more power than the finance minister. While submitting his resignation, Matthai was stiff and unbending. Nehru felt hurt by what he considered Matthai's discourteous behaviour when he was trying to placate him. In hindsight Matthai's apprehensions proved to be well-founded and there were repeated economic crises in the country over the next decades. Erosion of control was an issue which exercised Matthai greatly. Years later when he was appointed vice chancellor of Bombay University, he objected to governors of states being ex-officio chancellors of universities. He was rather aggressive with the gentlemanly governor of Bombay state, Sri Prakasa, who had newly arrived. The principle he was fighting for to protect academic freedom from political interference was very valid. Historians and economists will gather much insight from Dadabhoy's accounts of Matthai's finance and railway budgets and the report of the Taxation Inquiry Commission, but the subjects could be heavy going for an average reader. The Matthai family is full of achievers. His son Ravi was the first director of the IIM Ahmedabad, his nephew Verghese Kurien became the father of the milk revolution, having landed up in Anand quite by coincidence. One would have preferred more insight into the personal life of Honest John, a nickname given incidentally by Nehru. Unfortunately, Matthai seems to have destroyed most of his private and official papers. The author is contributing editor, The Indian Express
Mint
3 days ago
- Politics
- Mint
Why the Indian government needs to redefine the idea of reform
When the Soviet Union collapsed in 1991, political scientist Francis Fukuyama prematurely declared the 'end of history'. He believed that capitalism and democracy—the Washington Consensus—had finally prevailed over socialism and totalitarianism. History has returned. Ideological conflict between democracy and capitalism has not ended. In fact the two ideologies are conflicting within the Western victors of the old Cold War. Civil society movements are speaking in the West on behalf of people left behind by the 'free market' of private enterprise. Other voices on 'the Left' demand a larger role for governments in providing public services and social security. And others speak for protection of the natural environment. Meanwhile the Right advocates for lower taxes, less regulation, and more freedom for capital to roam the world. The fundamental conflict between the core principles of capitalism and democracy—i.e. between the rights of owners of capital on one hand, and the rights of all humans on the other—continues. It is a conflict between political conservatives and political progressives. Between conservatives, who want to retain their power to fix the rules of the game from which they have benefitted, and progressives who want to change the rules for the benefit of those left behind. Also read: How John Matthai became a leading light of economic policy Democracy and capitalism are founded on different conceptions of fundamental rights. Capitalism's foundation is property rights. Democracy's is human rights. Capitalist institutions run on the principle that whosoever owns something has the right to use it as he wishes, and also that whosoever owns more of a shared resource must have a greater say in how that resource is used. Therefore, whoever owns more shares in a corporation has a larger vote than those who own fewer shares. On the other hand, ownership of property does not matter while assigning voting rights in democratic institutions. Because, in democracy, every living person, whether she has a billion dollars of wealth, or no dollars at all, has an equal vote in the governance of the collective human enterprise. The clash between capitalism and democracy is a clash of fundamental principles for good governance of societies. When appliances designed to run on AC power are plugged into sockets providing DC power, there will be blow-outs. Similarly, when institutions of governance designed to run on fundamentally different principles are plugged into each other, something will blow up. Fundamental contradictions between the principles of capitalism and democracy are causing violent conflicts amongst nations and within nations. To create an equitable, sustainable, and more harmonious world in the 21st century, institutions of democracy and capitalism must evolve, from the shape in which they have been locked in with the so-called 'Washington Consensus'. Humanity must find new solutions to many societal, economic, and environmental challenges in a hurry. They are listed in the 17 Sustainable Development Goals all governments have signed up for. Institutions are vehicles designed by humans to realize their collective aspirations. Institutions of capitalism, as well as institutions of democracy, must be reformed to solve the existential crises of increasing inequalities and rapid climate change that are threatening all humanity. Reforming Capitalism [Lawyer and Deputy Chairman of the Tata Engineering and Locomotive Company (Telco)] Nani Palkhivala supported private enterprise for economic growth. He was also a great defender of the democratic rights of citizens. When Indira Gandhi declared an Emergency and suspended political freedoms, he withdrew from a case in which he was representing her. This caused consternation in the Tata companies. J.R.D. Tata was naturally concerned about the effect Palkhivala's uprightness would have on Tata's businesses. But he supported Palkihivala nevertheless. Designs of new forms of capitalist institutions, such as the limited liability company invented in the 17th century enabled capitalism to expand. With the evolution of institutions for governing international finance and international trade in the twentieth century, capitalist corporations have been able to spread across national borders. Capitalist institutions have enabled global and national GPDs to increase and have lifted millions of people out of economic poverty. Also read: Fitzgerald's critique of capitalism in 'The Great Gatsby' remains valid 100 years later Economists promoting free markets gained more power within Anglo-Saxon governments from the 1970s onwards. Milton Friedman, who became famous for his dictum that 'the business of business must be only business', and Frederik Hayek, known for his thesis that more governance was 'the road to serfdom', persuaded Margaret Thatcher in the UK and Ronald Reagan in the US to push back against governments in their countries and to privatize public services. Reagan even said that Government is not the solution; rather, Government is the problem. This turn of ideology gave big capital greater power. Democratic governments, as mentioned before, must represent the interests of all people, rich and poor equally. Though the richest people within any society will always be numerically less than the numbers of poorer people (it is a mathematical distribution as the Italian economist Vilfred Pareto had pointed out in the nineteenth century). However, the rich few will acquire greater power in the governance of societies than the poorer many whenever the principle of property rights dominates. The shift in the balance between democracy and capitalism towards capitalism in the last thirty years is made vivid by the creation of international tribunals who adjudicate in disputes between foreign investors in countries and the governments of those countries. Governments of countries represent the interests of millions, even billions, of people in their countries. On the other side in the dispute are a few investors of capital. Global institutions have come to pander too much to financial investors, making it easier for them to enter and exit countries at will, while stopping human migrants searching for better opportunities across national borders. The rules of globalization have made life much easier for capitalists than for workers. The word 'reform' has taken on a one-sided connotation: reforms seem to imply removal of constraints on investors and businesses. This was starkly revealed in India, and other countries too, during the Covid pandemic. The poor lost incomes and homes while stock markets broke records making investors even richer. The Indian government's move at that time, to 'reform' labour laws to attract more foreign investments, making it easier for employers to fire workers and curbing unions too, made clear that large investors had more political power than common people. Excerpted with permission from Speaking Tiger Books. Also read: This women farmers' network envisions a feminist future for agriculture
Mint
07-06-2025
- Politics
- Mint
How John Matthai became a leading light of economic policy in independent India
The biographer is a bit like the cat burglar, stealthily climbing up the scaffolding of a person's life, breaking in, surveying the assortment of riches and then leaving with only a few select, precious elements. This sounds easier on paper than in practice. The biographer starts his or her undertaking with an inherent handicap, given the limited access to a subject's life (especially if the subject is long deceased), and is forced to temper vaulting ambition with discretion. It is in the choice of things the author focuses on—the life lived and the circumstances surrounding that life—that determines what makes for a good biography. What finally makes a biography truly stand out is the craft of storytelling, transforming the tedium of chronology into a compelling narrative. Bakhtiar K. Dadabhoy's biography of John Matthai, Honest John, is an object study of how an author has to perform an intricate balancing act between the different elements of a subject's life: unspooling the various milestones, his professional progression, the contexts (economic, social and political) defining his professional choices and, finally, how the interplay between the subject's personal events, or emotional growth, determine some life choices or professional achievements. John Matthai is, admittedly, an interesting choice—independent India's first railways minister and its second finance minister—though charting his life holds myriad challenges and Dadabhoy's courageous enterprise manages to score on some counts but comes up empty on many others. Also reads: My mother, the family's memory-keeper Matthai's life became manifestly fascinating by first moving from the private sector to the government, and then becoming a core member of the policy circle that watched over the transition of India from a colony to an independent republic. Matthai had till then shifted from academia to policymaking before settling down at the Tata Group. As a professor of economics at Madras Presidency College, he was nominated to the Madras legislative council in November 1922, affording him first-hand experience in bridging the distance between theory and practice. This brought him to the notice of the Tata Group which pursued him and convinced him to join. Matthai's work on the Bombay Plan—drafted under the imprimatur of J.R.D. Tata and G.D. Birla, among others—had caught the attention of both Congress party leaders as well as the colonial administration. Matthai's graduation into national-level policymaking happened when he was invited to join the interim government in August 1946. It is here that Matthai bumped up against national politics, preparing him for long debates, contentious arguments and partisan broadsides against his policy choices. Initially approached for the finance portfolio, the political exigency of having to accommodate Muslim League's Liaquat Ali Khan forced Matthai to console himself with the industries and supply portfolio. From here to railway minister during independence, which literally had to transport the horrors of Partition across borders, and finance minister thereafter, Dadabhoy's biography is like a luxury train, affording readers a fleeting view of modern India's economic history as it passes by. Dadabhoy diligently excavates official memoranda, policy briefs, letters, Parliament records and debates to provide a glimpse of how a newly-formed republic, recovering from decades of surplus extraction while grappling with widespread poverty and the after-effects of a devastating communal carnage, was trying to craft a sustainable and equitable policy architecture. Statements from leaders with contesting views provide an interesting dynamic, showcasing some of the moral and ethical dilemmas in constructing a democratic, empathetic and secular republic from scratch. Matthai's biography as a vehicle provides an excellent vantage view. But herein lies the nub. There is a lot going on outside that is covered meticulously and, yet, the tumult and turmoil occurring inside the vehicle goes completely undocumented. This is a large, noticeable gap; Dadabhoy has fastidiously mounted flesh and bones to a skeletal framework but forgotten to add a soul to the end-product. It is this conspicuous omission that robs the biography of meaning. Writing about the art of writing biographies, specifically Lytton Strachey's biography of Queen Victoria, author Virginia Woolf had commented: 'Could not biography produce something of the intensity of poetry, something of the excitement of drama, and yet keep the peculiar virtue that belongs to fact—its suggestive reality, its own proper creativeness?" This 'suggestive reality" is perhaps the secret sauce that could have helped Honest John become a compelling narrative, instead of just an interesting read. For example, close to 100 pages are dedicated to tracing the debates, question-and-answers, budgetary allocations after Matthai joins the interim government and later assumes office as railways minister. It is an informative interlude, providing readers a view of India's modern economic history in the making. But, then, readers come away not any wiser about the dramatis personae, specifically John Matthai, scripting this important chapter in India's history. In the preface to American Prometheus, a biography of scientist Robert Oppenheimer, authors Kai Bird and Martin J. Sherwin confess that, 'It is a deeply personal biography researched and written in the belief that a person's public behaviour and his policy decisions (and in Oppenheimer's case perhaps even his science) are guided by the private experiences of a lifetime." There are multiple instances in Honest John which cry out for some understanding of Matthai's 'private experiences". The first, and most obvious, missing link in the book is the influence of Achamma Matthai. Apart from a perfunctory mention in the book as John Matthai's wife, Achamma deserved some more exposure. She was one of the early female graduates in India, having graduated with a bachelor of arts degree from St John's Diocesan College, Kolkata, in 1920. The relationship between Achamma and John needed to be explored in more granular detail and not the boilerplate statement, 'It proved to be a happy marriage". Achamma's influence on John Matthai's career trajectory, his professional choices and his moral journey looms over the book like some nebulous spirit, palpable yet undefined. This becomes evident in March 1944, when both John and Achamma are distraught after their daughter Valsa dies under mysterious circumstances in the US. This is soon after the Bombay Plan is announced and two years before Matthai resigns from the Tatas to join the interim government. The interim period is intensely important but Dadabhoy provides little for us to understand Matthai's state of mind, how he manages to tackle the demons or how the tragedy shaped his personality thereafter. In the foreword to the book, Matthai's daughter-in-law Syloo (married to Ravi Matthai) describes the man: 'Daddy was seen as being a formidable person, a man with a serious demeanour and an eminence which many thought precluded intimacy or even small liberties. But, at home, he was an entirely different person." In other words, Matthai, like everybody else, was human with the usual flaws and frailties. Dadabhoy provides a brief glimpse of the man's faultlines by recounting the episode where Matthai seeks Prime Minister Jawaharlal Nehru's intervention after Matthai's son reportedly runs over and kills a pedestrian in Allahabad. This is the only instance when readers catch sight of the great man's feet of clay; Dadabhoy's hands may have been forced here by an earlier book which first recounted the incident. But barring this single incident, there is scarce little to sketch out the man's personality. This shortcoming is perhaps born out of necessity. While Parliamentary records and inter-ministerial archives have become much more accessible, we do not know if Dadabhoy had similar luck with John Matthai's personal documents and letters. Also, to be fair to Dadabhoy, many of the people who knew Matthai personally have all passed on, adding another layer of insurmountable constraints. This biography, therefore, apart from being a valuable document for understanding how some of India's policy contours unfolded in the first decade after independence, adds little to the mystique of John Matthai as one of India's leading post-independent policy architects. The author is a senior journalist and author of Slip, Stitch and Stumble: The Untold Story of India's Financial Sector Reforms. He posts @rajrishisinghal 'Honest John: A Life of John Matthai': By Bakhtiar K. Dadabhoy, Penguin Random House India, 396 pages, ₹999 Also reads: India's growth and urban planning: On different planets
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Business Standard
27-05-2025
- Business
- Business Standard
Best of BS Opinion: A fuse already lit across India's every front
We've all seen it: the candle you lit in the dark during a power cut, the firecracker fuse you dared not go near again, the tangled mess of cords behind the TV that heats up but never sparks. You sense it, the heat building just before the flare. That moment before everything shifts. A series of slow burns, and quiet tensions coiling quietly until they're no longer silent. The sparks are already there. In money, in monsoons, in mindsets, all waiting to blow. Let's dive in. Start with America, where the House has passed a remittance tax that hits Indian H1B and F1 visa holders hardest, notes our first editorial. A 3.5 per cent fee slapped on their family support, not offsettable against US taxes. For thousands of Indian students, workers and families, it's not just about money. It's about being told, again, you're welcome to work but not to belong. The fuse is lit, in the hearts of students juggling fees and families, in global goodwill that once seemed mutual. Meanwhile, in India's mandis, another spark is flickering hotter, temperature spikes are distorting vegetable prices more than any monsoon ever could. The Reserve Bank of India finds a 1 degree Celsius rise now triggers a 1.3 per cent jump in vegetable inflation. Short harvest cycles and lack of cold storage only amplify the volatility, highlights our second editorial. Even with a good rain forecast, farmers remain vulnerable to the heat's unseen fuse, set to burst without notice. And then there's growth, or the longing for it. Nitin Desai points out that India's entrepreneurs often shy away from risk, opting for low-tech retail finance over building the next Samsung. Without a nudge toward bold innovation and global ambition, India risks becoming the world's back office forever. Smart minds kept safe but never sparked. Rama Bijapurkar adds to the slow combustion: household consumption is both booming and breaking. Stock market dreams push one narrative; FMCG realities say another. The optimism, especially in rural India, may be real, but it's also reined in. When wages rise, or jobs feel secure, expect a surge. But right now, we're all waiting with a match in hand, unsure if it will light. Even history feels like a flame rediscovered. A K Bhattacharya revisits John Matthai, India's forgotten second finance minister, whose brilliance and contradictions shine in a new biography Honest John – A Life of John Matthai by Bakhtiar K Dadabhoy. A man who quit over the Planning Commission, spoke extempore in Parliament, and whose personal story, including his son's tragic scandal, reveals both integrity and its limits. Stay tuned!
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Business Standard
26-05-2025
- Business
- Business Standard
John Matthai: The values of service revisited in fresh perspective
In Epilogue, however, Mr Dadabhoy chooses to dwell on Matthai's children and their achievements. In a biography of John Matthai, Epilogue should have been on his larger legacy in public policymaking Premium A K Bhattacharya Listen to This Article HONEST JOHN: A Life of John Matthai by Bakhtiar K Dadabhoy Published by Penguin XXIV+396 pages ₹999 John Matthai had many unique distinctions. He was India's only post-independence finance minister who had also held that responsibility in the interim government, formed before the country gained freedom. As finance member in Viceroy Wavell's Executive Council, Matthai took some important decisions such as abolishing the notorious salt tax, levying an export duty on cotton and removing price controls on jute and jute goods. But in less than two months, he had to make way for Liaquat Ali Khan of the Muslim League, which belatedly
