Thoughts on economics and liberty

ESTABLISHMENT AND POLICIES OF THE SWATANTRA PARTY – notes from a doctoral dissertation

Found this on Shodhganga (which is a truly fantastic resource for all Indians). I’ve converted to text, and will annotate lightly, below, as I read the material.



As already noted, the post-1952 general election yes witnessed the major political parties adopting leftist policies, except the Bharatiya Jana Sangh. The Indian National Congress (INC) dominated the political scene in the country. During the general elections of 1952 and 1957, the INC won majority of the seats and formed the government. At the states level also, the INC formed governments in more number of the states than not. Despite having clear political and economic programmes and highly qualified and matured leaders, the opposition political parties failed to make inroads into the vote bank of the INC. Some of them were very strong at the state level. But they failed to collectively challenge the single party domination at the central level.

After independence, when the country went to polls in 1952, the first in the history of independent India, the INC secured the requisite number of seats to form government at the centre under the premiership of Pandit Jawarharlal Nehru. After 1952, the INC consolidated its hold on the country and on the electorate. The consolidation of the INC led the opposition parties into further confusion in their rank and file. The opposition parties were further weakened when the INC adopted some leftist policies of the opposition parties like the Communist Party of India (CPI) and the Socialists.

Social Groups That Helped the Formation of the Party

Establishment of the Swatantra Party was formally announced in Madras on 4 June 1959. Before the emergence of the Party, a lot of preliminary preparations were made. The announcement of the party came sharply after the Nagpur Resolution of the INC (1959). A notable feature of the birth of the Party is that it had a south Indian origin.

On the birth of the Swatantra Party, K.P. Karunakaran commented thus:

In one sense this was not the emergence of a New political force, but only the regrouping of the conservative elements in Indian society which were making themselves felt in the working of other parties earlier.I

The fact is that several diverse social forces and individuals played a vital role in the formation of the party. At the ideological level, these forces and personalities came together because of the problems like “Statism” and the Nagpur resolution. C. Rajagopala Chari (Rajaji) played a prominent role in bringing these forces together.

The Forum of Free Enterprise (FFE) and The All India Agriculturists’ Federation (AIAF):

In the establishment of the Swatantra Party two social forces took lead and provided the needed organisational and mass base for the party. They are: The Forum of Free Enterprise (FEE) and the All India Agriculturists’ Federation (AIAF), founded in 1956 and 1958 respectively.

These two organisations took a clear stand against the government controls, taxation and general economic policy relating to Indian industries and agriculture. The Swatantra leaders acknowledged several times their debt to these two organisations. Rajaji while highlighting the role played by these two organisations said thus:

I shall be failing in my duty if I do not say how grateful we are to the Agricultural Federation of India for the inspiration they gave us for the formation of this party and to the Forum of Free Enterprise that helped us so greatly in the preliminary work.2

In the establishment of FFE, a group of business men in Bombay namely A.D. Shroff (TATAs) and Murarji Vaidya (India Rayon Corporation and the All India Manufactures’ Association) played an important role. M.R. Masani, a former official at the TATAs and an anti communist and anti socialist and bitter critic of Nehru’s policy played a key role in bringing the above forces together. Vaidya as president of the All India Manufacturers’ Association (AIMA) made it clear that his organisation was against excessive state controls. He explained their negative impact on economic initiative and on political liberty. Then Vaidya and Shroff wrote “Anti Statist” articles and published them as a special supplement of the Times of India newspaper. After reading these articles, Masani arranged for a meeting with Vaidya and Shroff and the idea of a “Forum of Free Enterprise” was mooted. Vaidya explained that such a group must be formed in a democracy like India and propagate its ideas.

The offices of FFE were opened outside Bombay. It began to propagate its ideas. It did not identify itself with any political party. Thus, the Forum claimed that it was “a non-political and non-partisan organisation.” The aim of the FFE was to “disseminate authoritative information to education … (and) bring to public notice the achievements of Free Enterprise in this country and the manner in which it can make its contribution to the economic development of India in order to raise the standard of living.”3 The FFE organised meetings and distributed leaflets relating to its views on Free Enterprise, Even though .the FFE advocated for Free Enterprise, it remained to laissez-faire. Shroff made it clear that the 19th century laissez-faire capitalism has no place in contemporary Indian politics. He said that the concept could not contribute to the industrial, social and economic advancement. But they wanted to expand the sphere of private enterprise.

They also sought to articulate in reasonably coherent fashion the accumulated grievances of the business communities, In particular, they hammered at the theme that a large free enterprise economy was necessary both for rapid economic growth and for the maintenance of political democracy. They warned, some times gradually, some times vigorously and stridently, that wide government controls, heavy taxation, and large public sector not only destroyed economic initiative but led ultimately down the familiar road of Friedrich Hayek.4

Thus, the FFE always took anti Congress stand and stood opposed to the statist policy of the Congress. Masani advocated the need to form a new party. Masani referred to the “dangerous polarisation” of Indian political life between the Congress and the Communist Party of India (CPI) and stressed the need to form a non¬communist alternative to the Congress Party, Regarding the formation of an alternative to the Congress, Masani discussed about it with Ramgarh, formerly Janata Party leader and a Swatantra luminary. The formation of a more coherent, non-communist opposition party with him at an “all parties” conference was held in 1957. By early 1959, the efforts of Masani took a definite shape. He also made it clear that the Nagpur resolution is an “insidious attempt to bring in collective farming of the Communist pattern by the back door.”5 So, Masani favoured the formation of a party with “middle of the road” policy. He had a lot of respect and admiration to Rajaji. So he wanted Rajaji to be the leader of the anti-communist movement.

Apart from Masani, Vaidya, a founder leader of the FFE met Rajaji in Madras in 1958 and discussed the necessity of a new party. At this juncture, the Nagpur Resolution appeared as a God-send to spokesmen for and supporters of the FFE who were eager to form a political party opposed to the policies of the Congress as well as the Communist Party, The FFE highlighted the possible implications of joint co-operative farming. By doing so, they identified themselves with the free enterprise in agriculture. This organisation made it clear that its sympathies lay with the land owners in the country-side.

In early 1959, the FFE held many meetings to discuss the Nagpur Resolution. Rajaji became very active and involved with these meetings in Bangalore. On 29 May 1959, the FFE held a meeting in Bangalore. The meeting was chaired by Rajaji. Masani was the first speaker. The subject for the meeting was the Nagpur Resolution. Both Rajaji and Masani criticised the Congress vehemently. They decided to start a new party. Anti Congress efforts appeared more fruitful. It was decided to announce the formation of the party at a later date. This was to be announced on 4 June 1959 in Madras at the AIAF meeting, schedule of which was already fixed. The announcement of the new party had been deliberately withheld at the earlier FFE meeting to avoid the impression that the party was too close to the FFE and also to avoid identification with it openly.

The All India Agriculturist’s Federation

The All India Agriculturist’s Federation (AIAF) was founded in Bangalore in 1958. A modest group was behind the formation of AIAF. The prominent leaders were N.G. Ranga, a peasant leader and Sardar Bahadur Lal Singh, an agricultural economist and for some time an adviser to the national planning commission. Singh served as president of the AIAF in 1959. The AIAF had more numbers and leaders from the south. It was dominated by land holders and rich peasants.

Both the FFE and AIAF organised meetings and distributed leaflets criticising the policies of the government. The AIAF denounced land ceiling and joint cooperative farming. They felt that the Congress policies would destroy the initiative and enterprise of the farmers who could increase the production of food grains. Rajaji began his meetings with the AIAF leaders. He preferred the AIAF to the FFE. So he deferred the announcement of the party till 4 June 1959 at an AIAF meeting held in Madras. It also indicates that the leaders wanted to identify themselves with the formers rather than the urban groups like the FFE. But the leaders of the two groups had sympathies for the Swatantra Party. Thus the Swatantra Party was able to muster strength from the aggressively free enterprising sectors of the business community as well as the rural propertied class.

The issues on which both the FFE and AIAF differed with the Congress were:

  1. They highlighted the importance of efficiency and productivity.

2, Preferred freedom for the economic sector from state controls, and

  1. Opposed to the Aristocratic class.

Besides the FFE and AIAF, there were others who wanted to search for an alternative to Congress. For example Raja of Ramgarh expressed his views about the necessity of a natural opposition to Congress. Likewise, the Maharaja of Kalahandi, a leader of the Ganatantra Parishad, met Rajaji to explore the possibility to form a  new party. Jankinandan Singh, a relative of the Raja of Darbhanga and a member of the Bihar Legislative Council asked Rajaji in 1957 to support the dissident Congress groups and Jankinandan Singh’s own Jan Congress, H.N. Kanoongo, a lawyer from Orissa and till them a political non-entity, also met Rajaji in 1959 with an appeal to float an opposition party.

Opposition to Nagpur Resolution

Already there was an opposition to the Nagpur Resolution in the country. There was also an opposition to the Soviet collective system or Chinese commune system in India. A Kisan Convention was held in Delhi even before the passage of the Nagpur Resolution to oppose these systems. It was attended by several AIAF leaders and about hundred Congress MPs. In January 1959, a Punjab Kisan Sabha was convened to protest against the Nagpur Resolution. It was attended by N.G. Ranga, then secretary of the Congress Parliamentary Party, Sardar Udham Singh (Nagoke), former Akali leader and then a Congress MP, Gen. K.M. Cariappa, retired army chief, and the Maharaja of Patiala. The Gujarat Khedut Sangh organised a protest meeting against the joint cooperative farming. Ranga was invited by them to develop close contact with prominent leaders of Gujarat.6

Opposition from Veteran Congress Men to Joint Cooperative Farming

Some Veteran Congress Men joined hands with Ranga, Masani and Nagoke. K.M. Munshi, and S.K.D. Paliwal, distinguished Congressmen from Bombay and Uttar Pradesh respectively made a scathing attack on the concept of cooperative farming. Both Nagoke and Paliwal tried to organise state wide groups to lead an opposition to the Nagpur Resolution. The Indian National Democratic Congress in Madras and the Democratic Party in Andhra Pradesh, the two splinter groups of the INC, were also opposed to the idea of cooperative farming. Thus, there was widespread opposition to the Congress in the country. The Nagpur Resolution gave an opportunity to them to come into the open. Now Ranga, through his wide spread travels in the country, helped himself to tap the groups float a new party.

On the necessity of a new rightist party Rajaji opined that “since the Congress party has swung to the left, what is wanted is not an ultra or outer – left, but a strong and articulate right.”7 He further said that the rightist elements in the Congress must “operate not privately and behind the closed doors of the party meeting, but openly and periodically through the electorate.”8

Despite his advanced age of eighty years, Rajaji was compelled to accept the role of leadership of a new party. Financial support was expected from the Tatas because of Masani and Vaidya.

On the need and necessity of organising an opposition party Masani said thus:

The Swatantra can succeed in giving effective opposition to the state capitalist policies of the present government and in providing the country with an alternative government only if it can mobilise a broad based coalition (of peasantry and professional men, especially). The middle classes of the cities and towns must join hands with the peasants in the villages in defence of their rights and property. If they do not hang together they will assuredly hang separately.9

On the ability of the party in mustering strength for its cause, Masani said that “the Nagpur Resolution is both a challenge and an opportunity. If properly explained, it brings to the landed peasants in the villages, who constitute 53.7% of our grater population, and to the middle classes in the city an awareness of their common interest and their common Peril.”19

Western Liberal Influences on Swatantra Leadership

As stated above, the Swatantra Party was against socialist ideas, Soviet style of planning and laissez-faire concept of capitalism. Even though, the Swatantra opposed to Russian type of planning, it favoured an “alternative plan.” It advocated individual freedom. It favoured “minimum interference by the state” in the activities of an individual. In formulating such liberal ideology by the Swatantra Party, there was western impact. Its Philosophy has been influenced by the neo-liberal school of the west, which was led by Hayek and Roepke in France, Monnet-plan in France, activities of the National Economic Development Council (NEDC) in the United Kingdom and the Social Market Economy introduced by Ludwig in West Germany and followed by Karl Sehiller of the Social Democratic Party successfully.

Neo-Liberal School

The development of liberal ideas is closely associated with the ideas of the Enlightenment and the French Revolution. Liberalism began as an ideology, which identified the interests of all people. The development of the universal and absolute features of enlightenment thought and liberal ideology were in response to the heavy handed censorship of the French Monarchy, which prevented a possible debate in public about the necessity of certain reforms. The ideas of liberty, equality and fraternity were a replica of the aspirations of the French middle class. The Bourgeoisie were unable to realise their dream due to the constraints of the institution of the Aristocratic society ruled by the absolute monarchs in France.11

During 18th century, the French middle class demanded for an end to all outmoded economic controls viz., on trade, capital investment and growth in business. It wanted to remove the role of the Catholic Church. As major property owning and economic institution in French Society, the Church wanted to dissolve the French Monarch and abolish the latter’s inherited privilege and social status. They favoured democracy in place of monarchy and in place of mercantalism it favoured an economic system of free trade based on capitalism and the politics of laissez-faire. It wanted that all people must enjoy the same opportunity for self development instead of inherited privileges and social status. Thus, they wanted that everyone should have an equal opportunity irrespective of his social status. Aristotle also felt that the best practicable state i.e. the polity should be based on property ownership with the middle class of the society dominating the political system. Thus, the classical liberalism was in favour of an union between economic and political power. It also felt that the functions of government should be minimal, otherwise it is a handicap for rational men to pursue their economic self interest. Adam Smith, through his wealth of nations in 18th century, highlighted the importance of economic liberalism. So “good government was limited government, and the best government was the government that governed least because government was an evil – albeit a necessary evil.”12 Thus, the main duty of government was to ensure for every individual his natural right to private property. In a way, classical liberalism was an ideology justifying the authoritarian control of the society by the middle class.

By 1930s, ‘liberalism’ meant the intervention of the state in the economic affairs of the citizens. “The ultimate end of both classical liberalism and neo-liberalism remains the same, to secure for all citizens an equal opportunity for individual self development.” The governments also realised the necessity to attain economic well being. The equal access to policy makers also helped to think on these lines. In an age of big business corporations, the free market is no longer a guarantee of an economic efficiency. “The ‘invisible hand’ may have been operative in an economy with many essentially equal competitors, but it has little relevance to an economic in which the decisions of a few conglomerates, and of government, affect the income, employment opportunities, and price level of consumer expenditures of virtually every citizen.”13

Thus Neo-liberalism is concerned with the political, social and economic rights of all citizens. The modern ‘service state’ intended to widen economic, social, and cultural opportunities by enacting laws that could provide equal educational opportunities, establishing social insurance systems, regulating working hours, wages, working conditions of labour, preventing the child labour and monopolistic business practices. Legislation helped to attain the desired objectives of individuals. Thus the Neo-liberal School of thought highlighted the individual freedom, least interference of the state in matters of individual and healthy competition in the field of industry and led to all round development of the society. Likewise, the liberal school of economists, consisted of the eminent scholars of the day like Prof. Hayek, Prof. Roepke and Prof. Shenoy who were the uncompromising individualists.14

The Monnet Plan

In modern state, the economic planning plays a crucial role in achieving all-round development of its subjects. In a way it can be treated as a welfare state. When there is demand for more varied services, the state plays a major role in the field of economy.

In France, the loose ways of the Fourth Republic were kept aside. Monnet plan was adopted which is highly etatist system of economic control. It helped the state to attain good results.16 In France the average per capita GNP had risen to 3.5% in France during 1950-60, while it was 2.1% during the same period in Britain.16

The National Economic Development Council

The industrial economy had been growing at a reasonable rate in the United Kingdom. But, the level of productivity was much lower when compared to several fast growing economies, viz., the German, the Japanese and the French. After 1945, several European Nations achieved faster growth rates. In the United Kingdom, the price stability and the balance of payments became a problem because of the slow growth rate of industrial production. The slow growth rate prevented the United Kingdom to compete profitably in International Markets. It resulted in the decline of the UK’s balance of payments. Under these circumstances, the U.K. constituted a council to review the investment and the movement of resources and to suggest ways and means to achieve a higher economic growth rate on par with the European Economic Community (EEC).

In the UK, the industrial productivity had increased considerably during 1950-1973. But it was less when compared to that of the EEC. From 1955 to 1972 the UK growth rate of Industrial output was less than half the rate achieved by the six EEC Nations.

During 1960-71, the real GDP per head increased to 79′)/0 in the UK, while it was 140% for the same period in the EEC.17 The council, in its fourth and final report on prices, productivity and incomes, submitted in 1961 pointed out that “a planning institution should be set up along French lines to collate the plans of the main sectors, enabling a consensus to be formed about a higher rather than a lower growth rate, with the exchange of information leading to simultaneous and mutually justifying commitments to investments.”18

Further, the council felt that the people, who were in responsible position, must accept the projection as a guide. It also called for a high degree of leadership ;n the government as well as the industry. As a sequel to the report, the government constituted the National Economic Development Council (NEDC) in 1961.

Regarding tax, the council recommended “a neutral VAT in place of profits tax and purchase tax, a wealth tax, a Swedish style tax reserve scheme to encourage the re-phasing of investment over cycle, and social security contributions based upon pay roll.'” It argued for a much higher level of employment in about a four-year period. To achieve a faster growth rate, it insisted upon measures to improve the balance of payment. It also insisted upon a policy to moderate the increase of incomes. To attain faster growth rate, it insisted that there should be increase in education and training, “measures to increase mobility of workers and capital through retraining, and regional policies, and the identification of government, trade union and management with an agreed growth objective, the achievement of which could be seeing to depend upon their joint efforts.”20

The government was more concerned with the growth of greater efficiency and international competitiveness of the British Industry, The Government constituted the Industrial Reorganisation Corporation (IRC). It was given wide powers. It was given freedom from the government interference and allocated £150 million to be used as a revolving credit. The IRC acted as a government’s intermediary in supporting prestigious individual companies and to promote British interest in case of expansion of multinationals like the Philips in the UK. Its major job was to extend financial support to well-managed companies, to introduce managerial reforms and to guide structural changes by adhoc encouragements through mergers.

The IRC extended support to the newly merged companies. It guaranteed future funds following mergers, and bought shares on the market to influence bid situations. In 1974, the labour government’s industrial policy was to participate along with the work force, to take decisions at the level of the individual big firms.21

The Social Market Economy in West Germany

As a result of the Second World War, Germany suffered and its economy was ruined. But, the Federal Republic of Germany (FRG) achieved within 25 years a remarkable economic recovery. Therefore, the West German achievement is often described as a “miraculous” feat. Despite the destruction as a result of the war, the dislocation, the division, the restriction imposed by the occupying forces and the massive influx of displaced refugees from the east, German economy recovered. German economy began to grow at an average rate of 10% per annum. This growth was possible under the conditions of controlled price inflation success in the absorbation of more than 11 million refugees, achieving full employment by 1957, and able to achieve the level of standard of living better than France and Great Britain by the end of 1960s.

Causes for Speedy Economic Recovery

Sixty-one per cent of the pre-war industries were located in West Germany. After 1945, these industries were rationalised and modernised. Production in mines was more than the pre-war period. The rebuilding of the German industry was done through modern techniques and machinery.

American technical know-how and financial aid were of much use. It came to have new overseas or colonial commitments. Initially, there was no defence budget. Even the cost of the German defence budget was less than those of France and Britain. FRG allocated 3 % of the GDP for defence, whereas Britain’s commitment was 7%.

Another important factor for speedy recovery was the availability of skilled labour. It helped a lot for the speedy growth. The migrant population of about seven million served as a useful asset in Germany. Here the post-war West German record was unmatched by any other industrial nation.22

There was good potential for the export of German goods. The government inference was brought down by not imposing its controls. Due to the demand for German goods, there was an expansion of programmes in Germany. The German Economic Growth rate was 7.5% during 1945-1960. For the same period, France achieved 4% and Britain 3%. In Japan, there was considerable economic recovery, Germany achieved this feat without any economic policy and planning. In Europe, Governments adopted an elaborate mechanism and plans to increase economic growth. But the FRG, under a Christian Democratic dominated coalition, followed an economic policy of neo-liberalism. It laid emphasis on free enterprise. In West Germany, “capitalism was tempered with social-purpose policies, but planning and even national forecasting were mostly rejected.”23 Instead, FRG followed the policy of Ludwig Erhard, finance minister for 14 years, who affirmed the virtues of competition and free market mechanism and favoured the removal of government controls. This policy worked very well for FRG during 1945-60, to rise from the position of debacle of defeat to that of an economic leadership in Europe.

The Social Market Economy

When the Ludwig Erhard’s liberal economic doctrine faced some problems, a dose of social welfare was introduced. A programme was designed to foster free enterprise. “The fundamental premises of this programme reflected a great faith in the virtues of competitions and private ownership and in the incentives of an economic system geared to the maximisation of profit. The policies that were pursued sought an overall reduction in the role of the state in direct management of the economy and the systematic removal of government controls on production, prices and profits.”24

The US favoured free enterprise system for the FRG. For a state which is opposed to communism, an economic doctrine which emphasises on freedom and liberty appears more congenial and attractive. The German business community has close links with the Christian Democratic Union (CDU) and the Free Democratic (FDP). The coalition of CDU and FDP led the German economy to regain during 1945-60. The coalition rejected extensive planning. Thus, the neo-liberal approach of Ludwig Erhard and his associates had affirmed their faith in the policies of laissez-faire.

This policy appeared more successful in promoting growth and development. Thus Erhard removed controls, promoted capital formations encouraged investments during 1950s. He restrained government intervention in the economy. The economic success was appreciated by the Social Democratic Party (SPD). In 1954, at the Berlin party Congress, Karl Schiller, a prominent economic ideologue of the party, made it clear that Germany needed a policy that sought “as much competition as possible, and only as much planning as was necessary.”25 The success achieved by “Social-Market Economy” had greater appeals of a socialist programme, Thus it is reasonable to state that the policy during 1945-60 was one of “positive, coordinated state intervention carefully moulded to achieve specific and limited objectives.”26 So, to set right the war ravaged economies in France, in the UK and West Germany, attempts are made in France through Hayek and Roepke and through Monnet Plan, in the UK through the National Economic Development Council and in FRG through Social Marker Economy particularly Ludwig and Karl Schiller played crucial role in the fast recovery of West German Economy.

Thus, the western liberal thought, namely Neo-liberal School of Thought in France, the writings of Prof, Hayek, Prof. Roepke and Prof. Shenoy left deep impression on the Swatantra leadership. Their liberal economic thinking had its impact in formulating the ideology of Swatantra’s economic policies, The Swatantra leaders were highly educated and had visited several European countries and had first hand information about the ills of the European states immediately after the conclusion of the Second World War,

After independence, Indian financial position lagged behind that of the European Nations. Even after ten years, there was no much change in the country’s economic woes. Nehruvian plans failed to deliver dividends, and speedy growth appeared to be a distant dream. The Western European liberal economic ideas and their all round development within a span of 15 years impressed the Swatantra leadership. It left a deep imprint on the thinking of the Swatantra leaders, Hence, the impact of Western liberal economic ideas, and they advocated those economic ideas in a modified form suitable to Indian conditions.

The Political Scene in 1950s

The Indian political scene in early 1950s was dominated by the INC and its leftist policies. As noted above, the INC, the CPI and the socialists began•talking of leftist economic programmes in the field of planning and control of major industries by the government in the country. With the adoption of the “Socialistic pattern of society” at Avadi near Chennai in January 1955 the INC made a dent into the vote bank of the Communists and the Socialists and attracted their voters into its fold. This strategic move of the INC helped the organisation to make inroads into the strong base of some opposition parties and independents.27 An excerpt of the Avadi resolution:

In order to realise the object of the Congress constitution and to further the objectives stated in the preamble and the directive principles of the state policy of the constitution of India, planning should take place with a view to the establishment of a socialistic pattern of society where the principal means of production are under social ownership or control, production is progressively speeded up and there is equitable distribution of national wealth.28

The Avadi resolution explicitly specified the socialist thought of the INC. This resolution and the left-oriented policies of the INC helped her to retain its vote bank and win the elections of 1957, thereby retaining its power at the centre as well as at the regional level. As a result, the rightist and conservative forces were unhappy.

So, the country was dominated by the INC and its leftist policies. There was no effective opposition in the country to challenge the single party domination of the INC. Under these circumstances, Sri Chakravarti Rajagopalachari, popularly known as Rajaji, India’s most respected and an elder statesman, emphasised the necessity to organise a strong and an effective rightist party in the country.

Rajaji who was born in Salem district in 1879, joined Mahatma Gandhi and joined freedom movement after completing his law degree. Since then, he was in the forefront of the freedom movement. He started his political career as chairman of the Salem Municipality. He was active in the civil disobedience movement. Then he served as Chief Minister of Madras Presidency during 1937-1939. Then he served as a member of the Governor-General’s Executive Council during 1946-1947. He served as governor of West Bengal during August-November 1947, Governor-General of India during 1948-1950, minister in the central cabinet in 1951. He moved from Delhi to Madras to take up the Chief Minister Post in 1952 and was in power till 1954. He slowly moved away from Congress and was instrumental in forming the Swatantra Party in 1959.29

Rajaji, a conscientious nationalist par excellence, developed a strong will to save parliamentary democracy in India. He was of the opinion that the domination of the INC was a “product of history rather than of electoral success” and it “would inevitably lead to totalitarianism and spell the ruin of parliamentary democracy. What is wanted to save parliamentary democracy is an opposition that will operative not privately and behind the closed doors of the party meeting, but openly and through the electorate.”30

He also felt that the left parties would have no future, because the congress by adopting their policies took away the chance of the left to emerge as alternatives to Congress. So, the left parties’ mainly remained as mere “prodding ginger groups.” Hence, Rajagopalachari highlighted the necessity to organise a rightist party to save democracy in the country and avert a crisis. He also explained his ideas in more detail on 14 April 1959 at Madras and on 29 May 1959 at Bangalore which served as the basis for the formulation of the Swatantra Party ideology.31

The INC, at its 64th annual session held at Nagpur in January 1959, passed a resolution regarciing cooperative farming. It had far-reaching effects on the thinking of the political parties. The resolution states that

The future agrarian pattern should be that of cooperative joint farming in which the land shall be pooled for joint cultivation, the farmers continuing to retain their property rights and getting a share from the common produce in proportion to their land. Further, those who actually work on the land, whether they own the land or not, will get a share in proportion to the work put in by them on joint farms.32

The Nagpur resolution was intended to impose a ceiling on land holdings, and it dealt with the trading of food-grains by the state a.nd the establishment of cooperatives within a three year period. Subsequently, they were converted into voluntary farming cooperative units.

Jawarharlal Nehru, through the Nagpur resolution, wanted to achieve a new social order. On this, Nehru said:

We should cover every village as a cooperative. We are launching out, in this way, in new directions outside the scope of our old administrative apparatus and we want to give far greater power to PancHayats and to the village cooperatives than they have today, knowing that they may misuse it, make mistakes, and the like.33

Nehru took active part in popularising the resolutions and in educating the public about the role of village cooperatives in India. After studying the resolution, Frank Moraes had the following comments to make:

What the Indian government aims at is a mixed economy combining the three elements of public enterprise, private enterprise, and in between cooperative enterprises on the lines of Scandinavian countries such as Sweden. In this type of mixed economy the balance must inevitably be tilted in favour of the government, with the era of the private sector progressively shrinking …. The likelihood is that as the plans develop, the private sectors share will progressively decrease.34

Thus, the Nagpur resolution altered the right wing opposition forces in the country. The very idea of village cooperative farming led to criticism. So, in order to fight against the abolition of private property and the Congress policy towards collectivism, the like minded people came together. Socialist ideas became the target of attack. The opponents to this ideology began to highlight the importance of free enterprise.

The conservative forces never accepted Nehru’s economic ideas. But in the early years of independence, they remained silent. When attempts were made by the Nehru government to reform the system by the abolition of Zamindari, there was no objection from these conservative circles. But the question of implementing Nehruvian model of economic philosophy which was called the socialistic pattern of society, there were serious objections. Thus, these factors compelled the conservative element to come together and form the Swatantra. Party to oppose the economic policies of Nehru.36

The decision to launch a new Conservative Party was taken at an informal meeting that took place in connection with the All India Agriculturalist’s Federation at Madras on 4 June 1959.36 A manifesto was prepared by a group of peasant leaders. Then, the party was christened as Swatantra Party. A public meeting was held in Madras to enlist the support to the new party. At this rally, Rajaji responded to the objections raised by Nehru to the formation of a new Conservative Party thus: “If he (Mr. Nehru) abhors the word conservative, I abhor his socialist slogans.”37 He further stated that the new party would “stand for the freedom of man, freedom of the farm and the family as against the attack by totalitarianism on the freedom of everybody,”38

He said the first job of the new party was the “creation of public opinion against the policies of the present government so that Mr. Nehru would come down and bow to the pressure of public opinion.”39 He also wanted to create public opinion against the policies pursued by Nehru.

Around fifty prominent leaders hailed from different states met in Madras informally under the auspices of the All India Agricultural Federation on 4 June 1959. This federation was an organisation mainly belonging to landowners and rich peasants. Rajaji presided over the meeting. Sri Jayaprakash Narain attended it as a special invitee:4o

On the attainment of social justice and welfare of the people, the participants of the informal meeting said thus:

Social justice, and welfare should not be sought to be brought about by violence or state compulsion with all their necessary accompaniments of injustice, expropriation and repudiation of obligations but must be brought into being by the spread of the doctrine of trusteeship adumbrated by Mahatma Gandhi.41

On the moral obligation of the wealthy, they said thus:

We believe that the educational activities of the government, direct and indirect, should be such as to emphasise the moral obligations of those who possess wealth to hold it in trust for society and a doctrine of life based on that moral obligation distinguished from seeking to establish a socialistic structure based on legislative sanctions involving expropriation and loss of incentive for the individual to work and increasing dependence on the state and its officials in every walk of life.42

The manifesto adopted by the party leaders made it clear that they “preserve what is good in our culture” and opposed to the “deep sense of uncertainty drying up all interest in land and factors alike.” In the field of agriculture, they were in favour of “obtaining the highest yields from the land.” To attain this, the farmer must be supplied with “material, implements and credit… without in any way interfering with the cultivator’s right of ownership, management and cultivation of land.” They opposed the collective farming. They felt that it would kill incentive. Agricultural produce must be given reasonable support price. In industry, there must be “incentives for higher production.” There should not be any restriction for private people to enter into major industrial sector. The taxation should be reasonable and it should not be heavy, “opposed to deficit-financing and foreign loans” beyond the repayment capacity of the government. The economic policies of the government should not lead to inflation. There must be security to protect property. They opposed “the expansion of bureaucratic services” which would be an “unproductive waste of national resources.” Instead, private officials could do it better and effectively. Finally, they believed “that the state will best serve its citizens by giving facilities for a proper decentralised distribution of industry and limiting its regulatory functions to the prevention and punishment of unsocial activities wherever called for.”43

Even though Nehru disagreed with the policies and programmes of the Swatantra Party, the formation of a new party was welcomed by him. He said: “although I do not agree with the party’s views, I welcome it and I hope that the party will put before the people of the country definite programmes and definite policies, so that you and I, and all of us, may be able to differentiate what they are and how far we can follow them.”44

The Swatantra Party opposed the Congress ideas of cooperative farming. But it favoured the abolition of Zamindari system.

Preparatory Convention of the Swatantra Party, 1959

To launch the new party formally at Bombay a preparatory convention was held during 1-2 August 1959. The’ speakers made it clear that they represented the conservative section in the country. They opposed the socialist policies and programmes of the INC. Rajaji, the brain behind the launch of the party, made it clear that the INC deviated from its original policies and programmes. So, he was compelled to leave it and float a new party. He said that the party stood for social justice and equal opportunities to all. The state according to Rajagopalachari had reached a stage of becoming “a giant entity, itself menacingly poised against the citizen, interfering with his life at all points, mistrusting the people, imposing restrictions, introducing a series of controls and regulations.”45

After Rajaji, an equally important personality who was instrumental in the formation of Swatantra Party was Prof. N.G. Ranga. Nidubrolu Gogineni Ranganayakulu, popularly known as Acharya N.G. Ranga was born at Nidubrolu, Guntur district on 7 November 1900. After his early education at Guntur, he moved to Oxford in 1920. He got B. litt. for his work on the “Economics of Handlooms”.46

During his stay at Oxford, he was greatly influenced by socialist thinkers like G.D.H. Cole, H.H. Brailsford, M.S.Wilkinson, Dr. Radford etc. He also visited various countries to study the working of peasant associations, socialist organisations and cooperative movements. He was also attracted towards freedom movement. After his return, he took Professorship at Pachaiyappa’s College, Madras. After three years, he left the teaching assignment and jumped into politics.47 He served jail sentences. He served as member of AICC and PCC of Andhra Pradesh in 1946. He also served as one of the secretaries of the Congress legislature party. He parted company with the Congress in 1952 and founded the Krishikar Lok Party. Then, he joined hands with Rajaji in establishing Swatantra party in 1959.48 He became president of the new party. He acted as leader of the Swatantra group in parliament. Finally, he left the Swatantra Party in 1973 and rejoined the Congress. He remained a Congress man till his death in 1995.

N.G. Ranga took up the cause of the peasant. He had faith in Panchayat system. Seven hundred village Panchayats were started in Guntur district because of him. The Bardoli Satyagraha had its impact on Ranga to start Kisan movement. He also started the Indian Peasants Institute at Nidubrolu. He opposed the Zamindari system. He supported the handloom works.49

Prof. Ranga while delivering his presidential address made it clear that the Congressmen must be prevented “from taking this country towards Sovietism and destruction of every kind of freedom and independence.”5°

He said that the new party was formed to talce up the above mentioned task. In reply to Nehru’s criticism of the Swatantra Party depicting its ideas as outdated ones, Ranga said:

We are convinced that ours is a part of the world wide movement of liberation of individuals from the controls of stateism and uplifting of the personality of every human being. Ours is a challenge to the totalitarian tendencies and dictatorial parties masquerading as governments which are threatening to overwhelm humanity. The new party is indeed the most progressive one and its birth is the latest contribution to the ageless human struggle for freedcm and independence against the equality ever-recurring manoeuvres of those in power to continue to be so in the name of society and state.51

Thus, while replying to Nehru’s criticism, Ranga in turn criticised the Congress method of adopting Soviet plans, socialism and the Nagpur resolutions. According to him the Congress policies were detrimental to the ideas of decentralisation, cottage industries, peasant ownership and the economic freedom based on family economy.52 besides Rajaji and Ranga, other stalwarts like M.R. Masani, Dr,K.M. Munshi, Gayatri Devi, N. Dandekar, Piloo Modi, G. Latchanna and so on worked for the party.

M.R. Masani (1905-1998), another stalwart and chairman of the reception committee and organising committee of the party in Bombay, made it clear that the formation of the party was an indication of the growth of political maturity in the country.53 With the educational background at Bombay’s Elphinstone college and the London School of Economics, he proved his mettle in a number of roles, visiting the countries like the erstwhile Soviet Union and the United Kingdom as part of his political training. Participating in the freedom struggle and suffering the trauma of jail terms during the British rule in India became a routine in his life. Beginning as a councillor of the Bombay Municipal Corporation, he rose to the position of the Ambassador of Brazil in 1948, and still latter to the position of the opposition leader in the Indian Parliament and Chairman of the Public Accounts Committee in 1967. The versatile genius and creative thinker in him compelled him to edit a monthly magazine, Freedom First in 1952. With this varied experience, he became President of the Swatantra Party in 1969 and Chairman of the Minorities Commission in 1978.54

Masani while addressing the party convention, mentioned about the bad features of economic situation in Indian. He said that there was “fear, hesitancy and uncertainty as to what the government would do next.”55 He further stated:

For the first time, a political party has come forward to say openly these things which were already in the people’s mind. The Swatantra Party will endeavour to break the spell of fear of established power, the thrail of ideology.56

Dr. K.M. Munshi, one of the Vice-presidents of the Swatantra Party, was a versatile and multi-faceted personality. He played a leading role in the freedom struggle. He was a veteran Congressman. He served as Home Minister of Bombay Presidency. He served as Food and Agricultural Minister in the Central Cabinet in 1950. He also served as Governor of U.P. during 1952-57. In framing the constitution his legal acumen proved to be a great asset. He was at ease with the fields of literature, education, law and administration. As an eminent. educationist he founded the Bharatiya Vidya Bhavan. He had the credit of being associated with a number of Indian Universities. With the establishment of the Swatantra Party, he began working to strengthen it.57

Gayatri Devi was born in a well known royal family. She was given in marriage into a royal family of Jaipur. She joined politics and became an active member of the Swatantra Party. She wanted to serve the people and preserve their freedom. She had her early education at Santhi Nikethan, London and Lausanne. She started the Maharani Gayatri Devi Public School in Jaipur. She served as one of the Vice-presidents of the Swatantra Party.

Dandekar was born at Baroda in June 1908. He had his primary education in old Junagadh state. He completed his secondary education in Madras. Then he went to the University in Colombo. He obtained his B.Sc. degree from the London School of Economics. He became a Chartered Accountant. In 1930 he got through the ICS in UK. After serving the then government in various capacities, he resigned in 1953. For some time he worked as financial consultant. He was attracted to the writings and speeches of Rajaji. It prompted him to enter into politics. Thus he Joined the Swatantra Party. He served as joint secretary of the Party.58

Piloo Mody worked as an architect during 1951-53 at Chandigarh. He got his Master’s Degree in Architecture from the University of California. He was vice-president of the Indian Institute of Architects. He was a good speaker in parliament. He served as executive vice-president of the Swatantra Prarty. He was editor of an English weakly, March of the Nation.

  1. Latchanna fought for the cause of the farmers and backward classes. He took active part in the freedom struggle. He served jail sentence during 1942-45. He served as joint secretary of Andhra Pradesh Congress Committee during 1946-50, He founded the A.P. Trade Union Congress, and served as its president. For a very brief period, he served as Minister in Prakasam Ministry. Again he served as Minister in B. Gopala Reddy Ministry during 1955-56. He served as secretary of Krishikar Lok Party founded by N.G. Ranga. He joined Swatantra Party in 1959. He served as president of the A.P. Unit. He also edited a monthly magazine namely Bahujana.

Apart from the above, there were several stalwarts who threw in their might for the growth and development of the Swatantra Party. Prominent among them were H.P. Mody, Dr. R.C. Cooper, Charanjat Ray, Harihar Dayal, P.K. Deo, Dr. Shantibai Gulabchand, K. B. Jinaraja Hegde, Bhailal Patel, J.M. Lobo, Prabhu, B. Ramachandra Reddy, Sardar Basant Singh, B.P. Singh, Lakshman Singh, K. Sundaram, T.Krishnamma, C.V. Siddaiah Murthy, V.V. Ramanna, Durga Datt Serawgi, J.K. Sinha, C.C. Desai, H.M. Patel, Lalit Patel, P.H. Solanki, Buddhi Prakash Sharma, C. Muttu Swamy, A. Subrahmanyam, S. Xavier, Dr. H.V. Hande, V.N. Patel, H. Mahant Swamy, and Syed Mohammod Ahamed.

Party Ideology

Masani made it clear that his party would provide an alternative to the policies of the Congress. His party would provide a reasonable place to the individual “by putting the individual right in the centre of the picture and rejecting lock, stock and barrel the methodology, as against the ideals, of socialism, which is more accurately described as state socialism.”59

The two day convention of the party was concluded on 2 August 1959. It adopted a 21 point statement of the fundamental principles of the party. The main points of these principles were: the Swatantra Party stood for social justice and equal opportunity for all. The happiness of the people depend on individual incentives. So “maximum freedom” must be given to the individual and there should be minimum interference by the state. The state should create the conditions for individuals to achieve fruitful results. The party “opposed to the increasing state interference of the kind now being pursued. The government policies must help to protect the freedom of citizens. The incentive to the individual effort should be restored. The party intends that the government must give top priority to the basic needs of the people, namely food, water, housing and clothing.” The party also felt that the individual has the right to educate his children according to his choice.60

The party was not for the concept of laissez-faire. It wanted that state should check anti-social activities and protect weaker and useful sections of society. State job is not business but its obligation to its subjects.61

The party was in favour of increasing food production in the country. The government should provide facilities to achieve the goals in food productions. It opposed the idea of cultivation through organisation. “It is firmly opposed to collectivisation and bureaucratic management of the rural economy.” The party also felt “that adequate attention has not been paid to the needs of the rural population. It also felt that steps may be taken to maintain a reasonable and steady price for agricultural produce, which is in parity with other prices.”62

In the field of industry, the party believed in the “incentives for higher production and expansion inherent in competitive enterprise, with adequate safeguards for the protection of labour, and against unreasonable profits, prices and dividends where there is no competition or where competition does not secure the necessary corrective.” The party felt that the government was confined to heavy industry only. “The party is opposed to the state entering the field of trade and disturbing free distribution, and introducing controls and official management with all its wastefulness and inefficiency.”63

“The party believes that in the field of production, the free choice of the producer and the consumer must be given basic place and importance,” The party was in favour of protecting “the small and self employed artisans, craftsmen and traders.” The state should tax reasonably.64 The party was against the tendency of deficit financing and foreign loans which were beyond the capacity of the country to repay.66 The party was opposed to all policies that lead to excessive inflation, high prices that reduced the value of savings, endowments and fixed incomes, and which created undue hardship for the present generation in the hope of a distant gain.66

On the burden of public administration and the involvement of natural resources, the party felt “that the cost of public administration should be reduced considerably… It is against the expansion of the bureaucratic machine, with a hierarchy of officials asked to do work which is best done by citizens and private agencies, resulting in unproductive waste of national resources.”67

The party felt that the “decentralised distribution of industry” would help to prevent anti-social activities. The party was in favour of creating employment opportunities and all-round industrialisation. It also advocated for better wages to workers. The party was opposed to the use of political pressure on officials. It stood for the rule of law, an independent judiciary, and for the full play of the powers of judicial review given to the courts by the constitution.68 The party reposed faith in truth and non-violence

The party wanted to allow freedom to all its members to express their views freely. So, it “gives its members full liberty on all questions not falling within the scope of the principles stated above.”69

Regarding foreign policy, the Swatantra Party had its objections to non-alignment. Prof. Ruthnaswamy, Swatantra Party’s deputy leader in the Rajya Sabha, felt that because of non-alignment policy, India faced the problem of war. Rajaji said: “if nonalignment is a sacred word and cannot be given up, our policy may be called non aligned alliance with the west. Non-aligned alliance is alliance not for weakening one or the other bloc, but for strengthening ourselves.”70 The Swtantra Party adopted a resolution on non-alignment at its Third National Convention at Bangalore during 1-2 February 1964 thus:

The Swatantra Party notes that the disastrous fundamental policies of non¬alignment and appeasement still continue, with the result that India has lost considerable prestige amongst its neighbours and in the old and that, instead of the Chinese Communist regime being isolated, it is India that is in danger of finding herself in that situation. The Swatantra Party is convinced that so long as this government, with the dead hand of past policies lying heavily on it, continues in office, there can be no hope of a solution of the problem of recovering our lost territory or of ensuring the country’s future security. The party calls upon the people of India to maintain vigilance against the possibility of further appeasement and capitulation to the claims of communist China.71

The party was in favour of settlement of all outstanding disputes with Pakistan. If this problem was solved, the country would

70 Swarajya, vol.9, n.3, 18 July 1964, pp.1-2


be able to neutralise its differences to protect the country from the threat of Communism. To solve the Kashmir issue the party wanted to reduce if not end Indo-Pakistan ill-feeling so as to promote good understanding and amity between the two countries.72 To solve the outstanding disputes, the parliamentary board of the party passed a resolution thus:

The solution of the Kashmir problem should be such as to reduce if not end Indo-Pakistan ill feeling, and such as to promote good understanding and amity between the two countries, and therefore the solution should not be such as to amount to a defeat for the one or the other, while it should provide an honourable status for the people of Kashmir, …73

Neither the Party nor any of its members proposed, as has been wrongly alleged in some quarters, that Kashmir should be handed over to Pakistan as part of a pact of amity between India and Pakistan, But public opinion in Kashmir today can only be met by a fair and conciliatory attitude. It is a proven fact that Kashmir cannot be held by compulsion against the wishes of its people… it should not stand in the way of a re-consideration and re-adjustment in order to attain Indo-Pakistan amity thereby strengthening India’s security against foreign aggression and helping the progress and prosperity of both India and Pakistan.

Discovering a vicious circle of mistrust and fear in Indo-Pakistani relations, the paxliamentary board said:

The circle must be cut at some crucial effective point if we are bent on achieving amity as the primary requisite for organising the security and welfare to the sub-continent. This requires courage, sacrifice and determined resistance to the forces both in Pakistan and India which contribute to the maintenance of ill-will and mutual fear. The Prime Minister and the Congress Party who have contributed not a little, both positively and negatively, to this unfortunate state of things should take full advantage of the present opportunity for reconciliation and not allow any further drift.74

Pakistani Attack

The Party’s attitude towards Pakistan changed, after the Indo-Pakistani conflict of 1965. The National Executive of the Party meeting in New Delhi on 181 and 2nd November 1965 adopted a resolution on “foreign policy in the context of the recent hostility between India and Pakistan.” The resolution said

Every step should be taken to combat aggression and to guard against further infiltration in Kashmir. At the same time, the door should be kept open for the day when normal and friendly relations may be restored between the two countries as soon as the Government of Pakistan makes amends and manifests a desire to cooperate in that endeavour and when this would not be misconstrued as having been brought about by Pakistan military adventures while the armed aggression by the Government of Pakistan has disqualified it from any further locus standi in the Kashmir problem, it cannot reduce the obligations undertaken by India towards the people of Kashmir. A solution of the problem should therefore be worked out, on our own initiative and at the proper time, such as would be mutually acceptable to India and the people of Kashmir and which would be in the interest of both. In this context, the committee regrets the arrest and detention of Kashmiri leaders who what ever their views concerning Kashmir have been opposed to its accession to Pakistan. The committee therefore calls for a policy of conciliation in Kashmir.75

The other foreign policy recommendations contained in the resolution were as follows:

(i) This isolation of India, particularly in the face of the continuing menace of Communist China, needs to be ended by a radical revision of the country’s foreign policy, the discarding of dogma and the adoption of realistic diplomacy.

(ii) The Executive wholly disapproves of the proposal that India should cut a drift from the Commonwealth.

(iii) The executive calls upon the Government to desist from supporting Communist China’s admission to the United Nations and urges the establishment of diplomatic relations with the Republic of China in Taiwan. It urges that all possible steps should be taken towards the liberation of Tibet, and that Dalailama should be recognized as the head of a free Tibetan Government in exile. The committee is gratified at the considerable improvement in the situation over the defence of South Vietnam as well as the defence of Malaysia and calls for a more clear and courageous stand by India in favour of South Vietnam and Malaysia which is not only called for by considerations of justice but is also demanded by India’s own vital interests.76


The Party welcomed the Tashkent Declaration. The veteran leader of the Party, C. Rajagopalachari, writing in Swarajya on 22 January 1966 said:

Kosygin of Russia has Pulled the two nations back from the brink and it is up to the leaders of Pakistan and India not only to be grateful to Soviet leaders but to engage themselves in what is necessary to be done in order to save their respective nations from gloriously ruining themselves.77

To defend the country from China, the party even recommended joint defence treaty with other Asian Countries. The party was in favour of concluding open alliance with the non-communist western powers. Thus Swatantra Party opposed the non-alignment policy pursued by the Congress government.


The Swatantra Party came into existence in 1959 with a view to oppose the leftist policies adopted by the Congress Party government headed by Pandit Jawarharlal Nehru. The party opposed the policies adopted at Avadi in 1955 i.e. the socialistic pattern of society and the cooperative farming adopted at Nagpur in January 1959 by the congress government. The party also opposed the controls and the licensing system. It emphasised the importance of individuals and it felt that the least governed is the best governed. So, it opposed unnecessary controls and the growth of the bureaucracy and the control of the heavy industry by the government. In the arena of foreign policy, it opposed the ideals of the nonalignment. Instead, it recommended to reduce tensions with Pakistan and form an alliance to check the danger of Communism. Thus, Swatantra Party strove to make the INC, the Communists and the Socialists to realise the folly of their policies and impact to them a new outlook and orientation. Hence, the political commentators visualised a bright future for Swatantra Party. The electoral experience of the party will be discussed in the next chapter.

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Sanjeev Sabhlok

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