CashNews.co
Free India’s first Union Finance Minister R.K. Shanmukham Chetty (1892-1953) was no prominent speaker on personality development. Yet, during his reply to the debate on his maiden Budget, as captured in Hand of Destiny (Vol I), C. Subramaniam, Bharatiya Vidya Bhavan, 1993, Chetty said: “I am one of those who believe that even [when] faced with a difficult situation, with confidence in yourself and a stout heart, you can certainly overcome your difficulties.”
A product of the Coimbatore elite, Chetty had a pretty long successful career during the most part of his life. Perhaps, it was against this backdrop that he made the remarks, which were actually intended as a reflection on the economic and financial position of the country. It was to his credit that the term, “mixed economy,” was first used in the Union government’s Budget document. While presenting Interim Budget for 1947-48, Chetty, an alumnus of the Madras Christian College and Law College, who came out with one more Budget in 1948-49, was quite clear in what he meant by the term: “We cannot afford to lose the benefit of the long years of experience which private enterprise has gained in the building up of our industrial economy. I believe that the general pattern of our economy must be a mixed economy in which there is scope both for private enterprise and for State enterprise.”
In a way, he set the tradition of resigning from the post of Finance Minister if there were differences with Prime Minister or his colleagues on any policy matter. His immediate successors — John Mathai, C.D. Deshmukh, T.T. Krishnamachari and Morarji Desai — all had quit, citing one reason or the other.
As for his political leanings, Chetty was a complex person. He was influenced by nationalist and the Congress personalities, including Annie Besant, B.C.Pal and Lala Lajpat Rai, while he was also an admirer of the Justice Party, a political adversary of the Congress during the freedom struggle, and, to quote Subramaniam, he became a favourite of the British Raj. In 1933, he also received the knighthood.
As a member of the Central Legislative Assembly for 11 years from 1923, he rubbed shoulders with prominent parliamentarians such as Bhulabhai Desai, S. Satyamurti and M.A. Jinnah. Before his stint in the Central Assembly, he served the then Madras Legislative Assembly for a few years. Despite being close to the Swarajya camp (or pro-changers) of Congressites, Chetty was also a host for Mahatma Gandhi, a prominent no-changer, during his visit to Coimbatore in the 1920s and ‘30s. It was during the 1930s that his career graph rose, as he began to represent India at many international events. First, he occupied the post of Deputy President (equivalent to Deputy Speaker of Lok Sabha) of the Assembly in January 1931 and President of the House two years later.
Even as he was getting widely known for his deep knowledge of finance and economy, Chetty, as a member of the Central Legislative Assembly, had sponsored a Bill, envisaging the removal of social disabilities for Scheduled Castes and this, in turn, became the basis for another Bill that was mooted in the Madras Presidency during 1938 when the Congress was in power and C. Rajagopalachari was Premier. Between 1935 and 1941, Chetty was the Dewan of the erstwhile Cochin princely state. Prior to his death, he was Vice-Chancellor of Annamalai University for two years.
Stint as Minister
Notwithstanding all the positions that he had held, it was his stint as Finance Minister that is still remembered. He had to handle the finances of the country, which was yet to come to terms with the aftermath associated with the traumatic Partition and World War II. Chetty’s maiden Budget was one of net deficit on revenue account to the tune of ₹26.24 crore but it hit headlines for the announcements such as the establishment of Damodar Valley Authority and the construction of the Hirakud Dam in Odisha at an estimated cost of ₹48 crore, apart from the Bhakra dam in Punjab. In his second and final Budget speech for the year 1948-49, he cautioned people of the country that “so long as food imports continue on the present scale, we would be confronted with the problem of an adverse balance of payments and the disequilibrium in our economy will persist.”
Even now, India is heavily dependent on imports to meet its edible oil and pulses requirements: approximately 45 lakh tonnes of pulses and 165 lakh tonnes of vegetable oil during 2023-24.
When it seemed that Chetty’s innings as Finance Minister was progressing smoothly, came the controversy over the proposed amendment to the Taxation of Income (Investigation Commission) Act 1947 [Nine years later, the Supreme Court declared the Commission ultra vires]. During a debate in March 1948 on the Amendment Bill, the Finance Minister assured the House that “each and every small case” would not be referred to the Investigation Commission, while the poor and middle class would not be harassed. Prior to its passage, the Bill was under consideration of a select committee.
On February 1, Chetty, even before the process regarding the amendment was over, ordered withdrawal of certain cases [the details of which were not given in news reports of The Hindu published in August 1948]. The Amendment Bill, tabled in Parliament on February 10, was referred to the panel on March 1.
Once the row was out in public months later, the Cabinet had discussed it repeatedly. On August 15, 1948, Chetty sent his resignation letter to Prime Minister Jawaharlal Nehru. Acknowledging that there was an “error of judgement,” Nehru, in his acceptance letter of Chetty’s resignation, chided the latter for not having “applied your mind into this matter.” At the same time, the Prime Minister emphasised that “at no time,” was there any question of Chetty’s bona fides in the matter. He accepted the resignation with “deep regret” and recorded how he admired “your ability and your application to the heavy and intricate work that you have had to face.”
Published – October 08, 2024 11:08 pm IST