Mundhra scandal is Independent India’s first big financial scam. It was raised by Feroze Gandhi, Nehru’s son-in-law where he had found evidence that under governmental pressure, Life Insurance Corporation had bought fraudulent stock worth ?1.24 crore. This is the largest investment the public-sector entity had made in its short history in six companies owned by Kolkata-based Haridas Mundhra, without mandatory consultation with its investment committee. It led to the resignation of then finance minister T. T. Krishnamachari.
More than 60 years ago, a debate in the Lok Sabha exposed a nexus between the bureaucracy, stock market speculators, and small businessmen. The subject was the Mundhra scandal, free India’s first big financial scam, raised by Feroze Gandhi, Nehru’s son-in-law. Gandhi had found evidence that under governmental pressure, Life Insurance Corporation had bought fraudulent stock worth ?1.24 crore—the largest investment the public-sector entity had made in its short history—in six companies owned by Kolkata-based Haridas Mundhra, without mandatory consultation with its investment committee. It led to the resignation of then finance minister T. T. Krishnamachari.