Advertisements
Monday, June 1, 2020
Home Editor's picks Maruti: The extraordinary crony capitalism under Indira Gandhi

Maruti: The extraordinary crony capitalism under Indira Gandhi

The dark taint of cronyism will forever cling to the name of one of India’s best known companies.

Also Read

Abhishek Banerjeehttps://dynastycrooks.wordpress.com/
Abhishek Banerjee is a math lover who may or not be an Assistant Professor at IISc Bangalore. He is the author of Operation Johar - A Love Story, a novel on the pain of left wing terror in Jharkhand, available on Amazon here.  

Every kid growing up in India knows that the ‘Nehru-Gandhi’ name is associated to a lot of things. Buildings, roads, streets, parks, airports, everything…

If you want to spend anywhere between 10-15 years as a “college student”, you can always go to Jawaharlal Nehru University (JNU). If you are the type who prefers to learn on his own time, there is always Indira Gandhi National Open University (IGNOU). If you are not the bookish type and want to excel in sports, you can always dream of winning the Rajiv Gandhi Khel Ratna award someday!

But a lot of people don’t know just how deep the Nehru-Gandhi name runs in India. This is the story of an Indian brand name that we all know about Maruti … and the dark crony capitalist history behind it.

The story begins around 1970. The Indian Government and the Indian public were beginning to think about an indigenous car. It had to be a small car, suited to Indian conditions and something that the “upper middle class” could afford to pay. Which was not a lot, after 200 years of British and 20 years of Congress rule.

For India the breakthrough was to come with the arrival of a dynamic young inventor, whose project Prime Minister Indira Gandhi described in these glowing terms:

a delicate young man, and with whatever money and energy he has, he has modelled a car, not a posh one, but one fairly comfortable and suitable to Indian conditions …  has shown enterprise and I just could not say no to him … if he is not encouraged how can I ask other young men to take risks”

Which young man is she talking about? Her son Sanjay Gandhi of course. How could she say no to him?

Like so many great visionaries and inventors, Sanjay never went to college. But it was said that he loved cars and he had a mother who “could not say no to him.” Just like all those other visionaries we’ve heard about.

In 1970, Maruti received a license to produce 50,000 cars a year and the project began. Sanjay settled on a piece of land near Gurgaon for the factory, at which point two minor problems presented themselves. The first was that it was agricultural land. This was quickly solved. I am sure the farmers received a fair compensation for their land.

The second minor problem was that there was a military ammunition dump nearbly and there was a rule about not building anything within a kilometer of that. This problem was solved as well … by getting the military to move the ammunition dump.

Getting money for the project was no problem at all. Government contractors and traders were lining up to invest in the mission. In fact, traders came forward and paid Rs 3 lakh as deposit each to become future dealers as and when the car would be ready. Like Indira Gandhi, perhaps they too just could not say no to Sanjay.

So far, so good. But there was still the tiny matter of actually making a car that works.

After several years of waiting, Maruti built a prototype, which was sent for testing to the Vehicle Research & Development Establishment, Ahmednagar.

The prototype failed the test.

At this point, some of those people who had deposited money with Maruti wanted a refund. But there was a simple procedure to deal with such situations (see this India Today issue from 1977).

Untitled.png

That’s right. The process of ‘Deposit Wapsi’ is much more complex than Award Wapsi.

Nevertheless, the criticism was beginning to pile up and reached a crescendo in mid-1975.

Did I say mid-1975? Yes, I did. On June 25, 1975, Prime Minister Indira Gandhi declared a state of Emergency.

Everyone who ever made a great invention has faced doubters. So did Sanjay. Just that he had a much more effective way of putting those doubts to rest.

We don’t talk much about the Emergency today. But even when we do, we speak of the Emergency as a purely political exercise. We rarely talk about the financial interests that might have been involved.

Untitled.png

Here’s the key. Sanjay was only a director in Maruti, where his total financial stake was just one share he had purchased for Rs 100.

However, there was a second company called Maruti Technical Services (MTS) Pvt Limited. Let’s see who owned that:

Untitled.png

So Maruti Limited decided to appoint Maruti Technical Services (owned by the family) as a “consultant”.

Maruti Technical Services (MTS) was to receive two percent of the net sales, subject to a *minimum* of Rs 2.5 lakh per year.

Notice that MTS had a paid up capital of just Rs 2.15 lakh and the company would be making a *minimum* of Rs 2.5 lakh per year. Good return on investment, you bet.

Sanjay Gandhi may have had a fascination for cars, but his real talent lay in financial matters.

Untitled.png

Eventually, after the Janata govt came to power, the loss making Maruti Ltd. was liquidated. But this did not affect the profits that the Nehru-Gandhis earned through Maruti Technical Services.

The ‘Maruti’ that we know today was restarted in 1980 with help from Japan’s Suzuki.

Untitled.png

Even so, the dark taint of cronyism will forever cling to the name of one of India’s best known companies.

Advertisements

  Support Us  

Whether NDTV or 'The Wire', they never have to worry about funds. In name of saving democracy, they get money from various sources. We need your support to fight them. Please contribute whatever you can afford

Trending now

Abhishek Banerjeehttps://dynastycrooks.wordpress.com/
Abhishek Banerjee is a math lover who may or not be an Assistant Professor at IISc Bangalore. He is the author of Operation Johar - A Love Story, a novel on the pain of left wing terror in Jharkhand, available on Amazon here.  

Two Pakistan High Commission officials caught spying using fake Indian identities, declared persona non grata

Delhi Police Special Cell nabbed two Pakistan High Commission officers after they were found engaged in spying using fake identities

‘Whether it is Sharjeel Imam or Tukde Tukde gang, no free hand will be given, those who challenge Indian unity and integrity will have...

Home Minister Amit Shah gave an interview to Arnab Goswami, a day after the first anniversary of the second term of Modi Sarkar.

‘Muslim Lives Matter’ trends on social media, demands for ‘protests’ in India along the lines of violent riots in USA being made

Certain individuals on social media want 'Muslim Lives Matter' protests in India along the lines of violent protests in the USA.

Woman ‘protestor’ poops on an overturned police car in middle of riots in America. Watch the video (or maybe not)

A woman was seen defecating on a damaged police car in USA, an act video recorded and photographed by onlookers

Jharkhand: Hindus allege cow slaughter on Eid, police call it rumour

In Jamri village of Rajepur police station area in Chatra, Jharkhand, Hindus have accused some Muslims of killing cows and then throwing beef in a well.

Rajdeep Sardesai tries to mock Sonam Wangchuk by peddling fake news that Statue of Unity is Made in China, deletes it: Read details

The Statue of Unity is actually constructed by Larsen & Toubro in India and not in China as claimed by Rajdeep Sardesai

Recently Popular

Hacker group ‘Anonymous’ declares war on Minneapolis police force after George Floyd killing, demands criminal charges against all cops involved in the incident

Anonymous said it does not trust the Minneapolis Police Department to "carry out justice" and warned the force to "expect" them

ISKCON rejects Shemaroo Entertainment’s ‘apology’, to proceed with legal action against comedian Surleen Kaur for abusive, derogatory statements

A complaint had been filed by ISKCON organisation against comedian Ms Surleen Kaur and Shemaroo Entertainment Ltd for her abusive, derogatory remarks against the organisations, saints and Hindus.

Actors Arshad Warsi, Milind Soman get attacked by Islamists and Pakistanis for urging people to boycott Chinese products amid Ladakh standoff

Following education reformer Sonam Wangchuk's call to boycott Chinese products amid Ladakh standoff, many celebrities have come forward to urge people to boycott Chinese products

Dangal actress Zaira Wasim quits Twitter and Instagram after being criticised for ridiculous post insinuating locust attack is ‘Allah’s wrath’

Dangal actress Zaira Wasim has quit Twitter and Instagram after receiving criticism for her insensitive post.

George Floyd protests: Nike, Louis Vuitton, Macy’s, Adidas stores vandalised and looted by rioters in the US

The 'protests' against George Floyd killing have now escalated into large-scale riots, vandalism and looting of luxury stores
Advertisements

Connect with us

229,060FansLike
357,780FollowersFollow
244,000SubscribersSubscribe
Advertisements