Maruti 800: Myth and reality
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On 18 January, the last Maruti 800 rolled off the production line at the factory owned by Maruti Suzuki India Ltd in Gurgaon. It was a poignant, yet significant moment for the brand, which had clocked a little over 30 years—most of it as the top selling car in the country.
Yes, it is indeed a moment for nostalgia. Yet, if you do stand back and look, it is much more. The original aam aadmi product didn’t just change the way we drive, but in its history, which actually predates 1983 (the year when the first Maruti 800 rolled out of the factory), lies buried a fascinating story of India’s economic reforms.
Contrary to popular perception, the country’s economic reforms were not launched in 1991. This is the typically lazy, revisionist interpretation that by the sheer number of times it has been uttered has now come to become an accepted fact. I have said this earlier, but no harm in reiterating it: Such an interpretation denies history, which is a continuous process and not the linking of some convenient discrete dots in time.
And the story of the Maruti 800—a name derived from Hindu mythology, the son of the wind god—captures this best. Any idea takes birth much before it goes into production. In the case of Maruti, it first took flight, as so many other path-breaking economic policy ideas did, in 1959 in association with L.K. Jha—one of the first proponents of liberalization, who till the very end believed that while there would be initial pain, in the long-term reforms, would benefit the country immensely.
I stumbled upon the history of the small car in Vinod Mehta’s book: The Sanjay Story, a book that I chanced upon only last year—the publishers had ordered a reprint of the book written by Mehta in the 1970s. (The book itself is a terrific piece of research of a tumultuous period of Indian history and in an era that came three decades before the invention of the seemingly magical Google search engine.)
In the riveting narrative on the chapter on Maruti, Mehta argues that the idea was first mooted by Manubhai Shah, a Union minister in Nehru’s cabinet in the 1950s. The concept of a small car was formally accorded policy space when a committee was set up under Jha in 1959; it endorsed the idea of a cheap car.
Something that I discovered mentioned in a speech delivered by K.C. Mahindra to the shareholders of Mahindra and Mahindra Ltd on 18 May 1959. “I welcome this move as two years ago I advocated exploration and research toward building a people’s car. I hope that the dreams will soon materialize and that the Committee would arrive at the conclusion that something should be done and done quickly to produce in the country what a person of small means can afford. You want a vehicle which will go and reasonably go anywhere, a vehicle which will suit the conditions of locomotion and roads available, a vehicle which is simple to operate and easy to service. Cost factor is of course most important for the people’s car as for other vehicles and costs can be brought down only by volume production. There is no other way.”
As it always is with such out-of-the-box ideas, the nays and ayes had it out with each other; with the latter making progress, incrementally though, after every encounter. Eventually it was decided in July 1968 that the car would be produced in the private sector.
Sanjay Gandhi, the son of then prime minister Indira Gandhi, and Madan Mohan Rao managed to obtain a letter of intent each for the purpose of manufacture of 50,000 small cars. Rao soon fell off the map, even while Sanjay Gandhi went on to float Maruti Ltd as a public limited company and came to acquire the land in Gurgaon. However, the idea never went anywhere under Sanjay Gandhi, who died in a plane crash and was not at the helm when Indira Gandhi was returned to power and revived the small car project as a public-private partnership with Suzuki.
If the birth of the idea, first conceived less than a decade after India gained Independence, was so dramatic, then its subsequent growth was even more. Not only did it spawn an automobile revolution, but it overnight created production systems, both within its own factory and among the ancillary units, that had never been seen in this country.
Coincidentally, the life span of Maruti 800 also roughly coincides with the period of India’s tryst with serious economic reforms—which formally kicked off when Indira Gandhi signed on to a structural adjustment loan from the International Monetary Fund (IMF) in 1981. For the record, 1991 was a benchmark year when this process of reforms was accelerated after India had to fall back upon yet another bailout loan from the IMF. The rest, as they say, is history.
In the final analysis, it is clear that the narrative of The small car with a big heart (as Mint poignantly headlined the story on Friday) is of far more significance to the recent economic history of this country than anything else. To foreign investors it is an assurance that India believes in continuity with change. For its citizens it is a reiteration of the self-belief that solutions unique to its circumstances are eminently doable and can pack a successful business model.
Anil Padmanabhan is deputy managing editor of Mint and writes every week on the intersection of politics and economics. Comments are welcome at firstname.lastname@example.org