Three Nationalisations

There are lessons from how governments over the years have dealt with SBI, LIC and Air India

- A K BHATTACHARYA

About seven decades ago, the Indian government under Prime Minister Jawaharlal Nehru nationalised three major entities. One of them—State Bank of India (SBI)—is celebrating the 70th anniversary of its reincarnation this month. The second—Life Insurance Corporation (LIC)—will mark 70 years of nationalisation in 2026. And the third should have celebrated its 70th anniversary of nationalisation two years ago, but could not do so as it was privatised just a year before turning 70 as a nationalised outfit. This was Air India.

The trajectory of these three enterprises that embarked on their individual journeys over the last seven decades tells the story of how Indian governments over the years have looked at the ownership pattern of economic entities—and what could determine the future of their ownership pattern. A close examination of the key factors at play would be instructive.

A common factor uniting the three entities is that they all belonged to the services sector. One was providing aviation services and the other two were providing financial services—offering banking and life insurance facilities to customers. They were all touching the lives of people in ways many heavy industries or manufacturing companies would not. The government's approach to their ownership was perhaps influenced by that realisation. Interestingly, Nehru's nationalisation was largely focused on taking over businesses operating in the services sector, in contrast to his daughter Indira Gandhi, who nationalised not just banks and general insurance companies, but also companies in the industrial or mining sector, like textiles and coal.