Narendra Modi was sworn in on May 26, a day before the 50th death anniversary of Jawaharlal Nehru, whose descendants he thoroughly vanquished in the 2014 general election. But Modi will have to dismantle parts of the legacy of Indira Gandhi over the course of his tenure if his government is to be considered truly transformational.In the 1970s, Mrs Gandhi inaugurated the high noon of Indian socialism, nationalising banks in 1970 and coal mining in 1973. In the case of banks, a second round of nationalisation took place in 1980. Congress and BJP governments since 1991 have relaxed the extent of government control over these sectors. Private coal mining is allowed for captive purposes and the Narasimha Rao-Manmohan Singh duo allowed new private banks in the early 1990s. But both nationalisation Acts now need to be repealed. This is politically difficult, though for different reasons in each case.The urgency is greater in the case of coal. The Economic Survey calls for amendments to the Coal Mines (Nationalisation) Act as part of a “stable long-term mining policy”. Domestic production of coal in fiscal 2012-13 and 2013-14 was 556 million tonnes (MT) and 566 MT respectively, while demand was close to 720 MT. In value terms, coal is the thirdlargest import item after petroleum products and gold. The imports would have been more had it not been for a slide in international coal prices. Power plants use more than 60% of India’s coal and sluggish production has the potential of upending the PM’s plan to provide electricity to every village.Thus, while the case for allowing private sector mining is clear, the government is moving gingerly. Coal India’s Jurassic-era unions are likely to go on strike the moment repeal of the Coal Mines (Nationalisation) Act is suggested. Indeed, a Bill seeking to open up mining to the private sector was introduced back in 2000. But attempts by groups of ministers to seek a political consensus have come to naught during both NDA and UPA regimes largely because of opposition from unions.Unions are opposed to the government diluting its stake in Coal India from the current 89%. In theory, the Congress should be open to supporting the Act’s repeal as it follows a model that the party has espoused: opening up a sector to the private sector without privatising the public sector incumbent. In 2011, the UPA government set up a GoM to arrive at a consensus on breaking Coal India’s monopoly. In practice, the Congress’ instinct may be to oppose.Repealing bank nationalisation laws would be far harder. They are regarded as one of the defining “achievements” of the Indira Gandhi era. A recent report by a committee headed by P J Nayak, ex-chairman of Axis Bank, calls for repealing the 1970 and 1980 Acts, incorporating banks as companies under the Companies Act and cutting the state’s stake to below 50% to free banks from the clutches of the CVC, CBI and CAG. The report envisages the government remaining the dominant shareholder, but says its equity stakes should be switched to a bank holding company that acts as a quasi-sovereign fund, though with only a portfolio of bank stocks.In his Budget speech, Arun Jaitley talked of a need to infuse equity of Rs 2,40,000 crore by 2018. He proposed to do this by preserving the public ownership of banks while selling shares to the “citizens of India”. He did not elucidate further. Others have come up with different numbers. In a September 2013 speech, former RBI governor Duvvuri Subbarao had estimated between Rs 66,000 crore (if equity holdings were brought down to 51%) and Rs 90,000 crore (if the current level of holdings are to be maintained). The P J Nayak report’s figure is the highest at Rs 3,50,000 crore by 2018, based on elaborate calculations. Any case, finding resources to capitalise can certainly put pressure on the fiscal deficit.So, at some stage the government would have to consider reducing its stake to below 50%. A road map of sorts already exists. The earlier NDA government had considered amending the nationalisation Acts so that government retained a stake of 33% while maintaining the public sector character of banks. Any change of this magnitude will be fiercely controversial and may need to be passed by a joint session.Unsurprisingly, the government is pursuing the insurance Bill and other low-hanging fruit. But Modi and Jaitley will have to grasp the nettle sooner or later. Even if it means taking the joint session route.