50 years of nationalisation

Status quo on banks will increase the burden on the exchequer

The Indira Gandhi government’s decision to nationalise 14 commercial banks 50 years ago on this day is said to be the most significant economic event after India’s independence. Though the decision was given an economic rationale, the underlying reason was more political. In 1980, the government took control of another six banks.

The idea of bank nationalisation, however, was not new. An internal committee of the All-India Congress Committee (AICC) recommended nationalising banking and insurance in 1948, which was endorsed by the AICC later in the year. After independence, the banking system had its problems and there were issues related