Seeds of Bank Nationalization was possibly sown in Ooty.
21 private sector banks were taken over by the government in 1969 and 1971.
The seeds of this historic decision were possibly sown exactly ten years earlier at Ooty at the All India Congress Committee, Sub-Committee Planning Seminar held on May 30-June 5, 1959. The meeting was attended by all top leaders of the congress party as well as economists like Dr.V.K.R.V.Rao. Nehru inaugurated the seminar. Indira Gandhi had just then taken over as the President of the Congress party. The seminar mostly reflected her hard line views on socialism.
The Seminar envisaged a continuous expansion of the public sector. Private sector was cautioned against ‘any exploitation and misdirection of resources’. The proceedings of the seminar upset the market sentiment of the country. Traders regretted that ‘Congress leaders cannot easily dissociate politics from economics’.
On June 10, Nehru had to clarify in a press meet in Delhi. He denied that it had been decided in Ooty seminar that only certain specified industries should be in the private sector and residuary industries should be in the public sector.
The seminar was also of the view that public sector enterprises need not be profit oriented. Economist like Dr. Rao strongly prophetically objected saying if the public sector units were not profit oriented they would eat away public resources.
If Nehru had been alive probably the banks may not have been touched. But with Nehru not in the way Mrs.Gandhi wasted no time in pushing through her agenda no sooner than she assumed office. Fortunately for her the economic conditions of the time were favorable for a rapid expansion of banking and her decision was vindicated.
Nilgiris Documentation Centre