In 1969, the open conflict between the Syndicate and Indira Gandhi became apparent. The death of President Zakir Hussain that year led to a vacancy in the position of President of India. Despite Mrs. Gandhi's reservations, the 'Syndicate' successfully put forth her enduring adversary and the then-Speaker of the Lok Sabha as the official Congress nominee for the upcoming Presidential elections.

Which of the following decision taken by Indira Gandhi led to the resignation of Morarji Desai (then Deputy Prime Minister and Finance Minister) from the government?

Both options 1 and 2

The correct answer is option 3: Both options 1 and 2.

The year 1969 was a turning point in Indian political history, marking the formal split of the Congress Party. The friction between Indira Gandhi and the "Syndicate" (the old guard of the Congress) reached a breaking point due to her shift toward socialist policies, which Morarji Desai strongly opposed.

1. Nationalization of 14 Private Banks (Option 1): In July 1969, Indira Gandhi decided to nationalize fourteen of India's largest private banks. Morarji Desai, who was the Finance Minister at the time, was a proponent of "Social Control" over banks rather than outright nationalization. Mrs. Gandhi took away the Finance portfolio from him to implement this policy, which led to his immediate resignation from the cabinet.

2. Abolition of the ‘Privy Purse’ (Option 2): The 'Privy Purse' was the annual payment made to the former rulers of princely states as part of their integration into India. Indira Gandhi sought to abolish these payments, viewing them as inconsistent with democratic and egalitarian principles. Morarji Desai viewed this move as a breach of the constitutional and moral "guarantee" given to the princes at the time of independence.

NCERT Text " The factional rivalry between the Syndicate and Indira Gandhi came in the open in 1969. Following President Zakir Hussain’s death, the post of President of the India fell vacant that year. Despite Mrs Gandhi’s reservations the ‘syndicate’ managed to nominate her long time opponent and then speaker of the Lok Sabha, N. Sanjeeva Reddy, as the official Congress candidate for the ensuing Presidential elections. Indira Gandhi retaliated by encouraging the then Vice-President, V.V. Giri, to file his nomination as an independent candidate. She also announced several big and popular policy measures like the nationalisation of fourteen leading private banks and the abolition of the ‘privy purse’ or the special privileges given to former princes. Morarji Desai was the Deputy Prime Minister and Finance Minister. On both the above issues serious differences emerged between him and the Prime Minister resulting in Desai leaving the government."