A series of Right To Information applications have busted an urban legend that Nizam Mir Osman Ali Khan of Hyderabad donated 5,000 kg of gold to the National Defence Fund in the aftermath of the 1965 war with Pakistan.
The Prime Minister’s Office, under which the National Defence Fund functions, responded to this reporter’s RTI query that it has no information of any such donation.
According to popular lore, Nizam Mir Osman Ali Khan is said to have given 5,000 kg of gold to Prime Minister Lal Bahadur Shastri during his visit to Hyderabad in 1965. The Prime Minister was touring the country to raise funds to steady the post-war economy. The story goes that after donating the gold, the Nizam asked only that the boxes containing the precious metal be returned.
In fact, the Nizam invested 4.25 lakh grams (425 kg) of gold in the National Defence Gold Scheme, floated in October 1965 with a generous 6.5% interest, to tide over the economic crisis.
The Hindu report
A report in The Hindu of December 11, 1965, from Hyderabad, corroborates the less glamorous version of the Nizam and his gold. As The Hindu reports:
The Prime Minister, Mr. Lal Bahadur Shastri and the Nizam of Hyderabad exchanged a few words to-day at the airport when the ageing ex-ruler came to greet India’s Prime Minister…
Addressing a public meeting later in the evening, Mr. Shastri congratulated the Nizam on his investing 4.25 lakhs grams of gold in gold bonds which was valued at about Rs. 50 lakhs. The investment contained old gold mohors (coins) whose value was more depending on their antiquity. “We do not want to melt these gold mohors but send them to foreign countries to obtain a higher value. We may get a crore of rupees,” he said.
The report also mentions a donation of 1.25 lakh grams of gold from the Tirumala Tirupati Devasthanams and a purse of ₹8 lakh in cash from Telugu film stars to the government.
The October 1965 National Defence Gold Bonds had the additional benefit of being an amnesty scheme. “The provisions of the gold control or customs regulations will not apply with respect to gold in any form tendered as a subscription to the gold bonds and no proceedings will be instituted… Further, where such gold has been acquired out of income which has not been disclosed under the Income-Tax Act … such income, or the wealth represented by the corresponding assets, will not be liable to tax under these enactments in assessments,” said the press note from the government.
While the Nizam’s investment was a smart move, mystery shrouds the beneficiary of the investment. The RBI rejected an RTI query on the investment as well as the final beneficiary, citing Section 8(1)(j) of the RTI Act: “unwarranted invasion of the privacy.”
Najaf Ali Khan, one of the grandsons of Nizam Osman Ali Khan, said he was unaware of the payout. “This is news to me. I don’t know who has claimed it. The Nizam had created 52 trusts but I am not aware of any trust receiving this money,” he said.
Courtesy: The Hindu