When a 'Tata'​ contested the General Elections...

In the general elections of 1971, the fifth since Indian independence, Naval Tata (father of Ratan Tata), then chairman of Tata Electric Companies (now Tata Power) decided to stand for elections as an independent candidate from South Bombay. The Shiv Sena was backing his candidature and Bal Thackeray was supposed to have been the principal campaigner. It was to be a three-cornered election. The Congress candidate was Kailas Narain. The third candidate was George Fernandes representing the Samyukta Socialist Party. Fernandes was a sitting MP and had gained immense visibility as a labour leader. Despite his leanings, he respected J.R.D. Tata. A couple of years earlier, in 1969, J.R.D. had personally invited Fernandes at the Safdarjung Road Tata Guest House in New Delhi to request him to lead the Tata Steel workers union, an offer that he had declined. The outcome of the elections was surprising. Fernandes lost his deposit with mere 10.34% votes. Unexpectedly, Naval Tata stood second with 40.38% votes. The Congress candidate won the election with 47.1% votes.

Image: Naval Tata (1904-1989), former Vice Chairman, Tata Sons

It was a reassuring moment for the Tatas and Indian democracy that a values-driven private citizen held a good chance to win elections. Yet, the direct and indirect implications of this experiment would soon emerge before J.R.D. and Naval Tata. 

Image: Prime Minister Indira Gandhi (1966-1977; 1980-84)

It is believed that Prime Minister Indira Gandhi was displeased with the Tatas’ attempt in contesting elections against the Congress candidate. Furious and unforgiving, she is supposed to have told J.R.D. Tata, ‘So the Tata group wants to set up a front against me?’ 

This was history repeating itself. Nearly 15 years earlier, Prime Minister Nehru had reacted in a similar fashion. The context was different. J.R.D. was increasingly disillusioned by the Nehruvian approach to socialism, centralized planning and nationalization of key industries. To add to that, during the 1957 general elections, the Communist Party of India, emerged as the second largest party in the Lok Sabha. J.R.D. believed that the country needed a credible opposition, and the leftist parties would further damage the prospect of free enterprise flourishing in India.

When Jawaharlal Nehru was upset with J.R.D. Tata

Image: Chakravarti Rajagopalachari (1878-1972)

Around 1959, Chakravarti Rajagopalachari, former Governor General of India, and a Congressman, started a new party in reaction to the Nehru-led Congress’ anti-industry and socialistic approach to governance. In a letter dated 15 May 1961, he requested J.R.D.’s support to the fledgling Swatantra Party. ‘I request you that even if you help the ruling party with funds for its political and electioneering activities, it would also be just and proper for you to help a party that seeks to build an efficient check on its errors.’ 

Image: Prime Minister Nehru (left) with JRD Tata (right) at Jamshedpur

Naval Tata asked J.R.D. to exercise caution. He was concerned that a public support to Rajaji would earn Nehru’s displeasure. J.R.D. took two full months before sending a positive reply. However, the transparent leader that he was, he communicated this decision to his ‘life-long friend’ Jawaharlal Nehru when he met him the next time. On hearing about the Tatas’ support to Swatantra Party, Nehru blew up, ‘You have no business to do that.’ In order to pacify him and clarify his stance, J.R.D. wrote a detailed letter to the prime minister dated 16 August 1961. JRD stated,

‘…We have been perturbed by the total absence of any responsible and organised democratic opposition which we feel is an equally indispensable element of any permanent democratic organisation of society… It is indispensable in the national interest that an effort should be made to displace the Communist Party as the second largest in the Parliament… We have therefore come to the conclusion that in addition to continued support to the election funds of the Congress, we should also contribute, although on a lower scale, to the funds of the Swatantra Party…’ [i] 

Image: An artist's recreation of Prime Minister Nehru and JRD Tata at Jamsedpur's Jubilee Park

In a letter dated 18 August Nehru responded,

‘…You are of course, completely free to help in any way you like the Swatantra Party. But I don’t think that your hope that they will emerge as a strong hope is justified…’ [ii]

The aftermath of Naval Tata contesting elections

In 1975, when Naval Tata was following up for permissions for Tata Power's thermal power plant expansion, the response was hostile to say the least. Madhav Godbole, Maharashtra’s power secretary threatened to take over Tata Power's assets. He even explored with the Western and Central Railways if they could make their own arrangements for power. The response was in the negative.

Finally, Naval Tata personally went to meet Godbole and presented his case with facts and figures. But Godbole (literally meaning the one who speaks sweetly, in Marathi) wouldn’t yield. This agitated Naval Tata so much that he reacted with an emotional outburst, ‘Even if I have been adopted into the Tata family from a Parsi orphanage, Mr Godbole, I cannot liquidate the assets created by my ancestors.’ This mollified Godbole a bit and he agreed to consider the application. The quid-pro-quo this time was that Tata Power's distribution network in Kalyan, Thane and Ulhasnagar was to be taken over by the government.  

Janta Party forms the Central Government

The threat of nationalization was looming large on most private firms. When energy sector companies like Burmah Shell, Esso and Caltex were nationalized in 1976 as Bharat Petroleum and Hindustan Petroleum respectively, the Tatas were concerned that the government would forcibly take over Tata Power. As a precautionary measure, the Tata Power offices were moved out of Bombay House and relocated to Nirmal Building at Nariman Point, a kilometre away. When the threat ebbed, the Tata Power office moved back to Bombay House and the Nirmal office space was given to TCS, led by F.C. Kohli, who was formerly with Tata Power. 

Despite these efforts, the Central government’s approval wasn’t coming. The indirect implication of Indira’s ire resulted in the permission for the fifth thermal plant of Tata Power getting delayed by full six years, till the Emergency was lifted and the Janata Party had come to power.

In an interview with The Hindustan Times on 1 January 1977, a couple of months before the Emergency was lifted, J.R.D. had appreciated the Emergency era for ‘bold steps’ it had taken for the economy, the success in reversing inflation and the discipline it inculcated in industry and society at large. He was impressed that throughout the Emergency, the trains ran on time. This earned him the indignation of the new Prime Minister of India – Morarji Desai, who rode to power in March 1997 with the Janata Party-led coalition on the anti-Emergency plank.

Image: George Fernandes, Industries Minister in the Janta Party Government (1977-1979)

In an exciting turn of events, the approval of Tata Power's fifth thermal plant was now before the new industries minister – George Fernandes, who was defeated by Naval Tata in the previous elections! Fernandes’ first reaction was to turn down the proposal. It was Viren Shah, chairman and managing director of Mukand Iron & Steel Works, who pleaded on behalf of the Tatas. He emphasized that the new power plant would not make J.R.D. or Naval Tata richer by a rupee. Instead it would supply additional power to thousands of small and medium enterprises of Bombay.

Fernandes was quite convinced. Yet, he explored whether a government undertaking was willing to take up this project. P. Ramachandran, Union energy minister, declined the proposal that the National Thermal Power Corporation (NTPC) could take up this project. Fernandes is believed to have called Maharashtra Chief Minister Vasantdada Patil to check if Maharashtra State Electricity Board would be interested. The rapid response was that no state electricity board had the ability to take up the project.  

Image: George Fernandes (second from left) with Prime Minister Morarji Desai (extreme right)

Finally, Fernandes himself called Naval Tata to check if Tata Power was still interested to proceed with their six-year-old application. Overwhelmed at the prospect of the project finally seeing the light of day after a 75-month wait, Naval Tata’s response was a resounding ‘Yes’. When Fernandes suggested that a senior executive could come to his office to complete the formalities, Naval Tata, the company chairman, himself landed in Delhi the next day.

Business historian Gita Piramal mentions the conversation that followed in Fernandes’ Udyog Bhavan office. When Fernandes asked Tata the reason that had caused the delay in gaining a clearance for the project, Naval remained silent. With a smile playing on his lips, he raised his hand with the thumb rubbing the index finger. When Fernandes further asked the level at which money was demanded, Naval Tata continued to smile but didn’t utter a word. Having understood the situation, Fernandes cleared the proposal. It also sent a strong signal to the government machinery that the Tatas were willing to wait, or even let go off business opportunities, but were not willing to grease palms of decision makers in Delhi.

Image: Tata Power Plant, Trombay, Maharashtra 

With the decks cleared, India’s first 500 MW thermal plant with multiple-fuel burning capability was commissioned at Tata Power’s Trombay complex in 1984. With its 152-metre chimney, it was twice the height of Qutub Minar. Only Japan had a similar sized unit in all Asia at that time. India joined the league, 13 years late.

Note:

[i] In 1996, Tatas Sons established the Tata Electoral Trust to insulate themselves against political pressures. The corpus for this trust was contributed by individual companies. It made grants on an impartial basis to all political parties for admin costs and overheads.

[ii] Nehru’s prediction did come true and the Swatantra Party merged in 1974 with the Bharatiya Kranti Dal (BKD). Post the 1977 elections, the BKD merged into the Janata Party. Yet, JRD’s concerns (stated in the letter) about the lack of a credible opposition in the Parliament and consequences of the excessive dominance of a single party rule for long decades were justified. They were reflected in the Emergency imposed by Indira Gandhi in 1975.