Who were Gillanders Arbuthnot, Jardine Henderson and Andrew Yule? How did the Tata group remain at the top during most of the post-Independence period in India? Why did the character of public sector enterprises change over the years? In this hefty volume, acclaimed business historian Dwijendra Tripathi and freelance writer Jyoti Jumani trace the fascinating journey of enterprises in India after Independence, and offer new insights into the lessons of history.
By no means a book meant solely to adorn coffee tables - the text punctuated by few images - is as academic as Professor Tripathi's previous research publications. Formerly the Kasturbhai Lalbhai Professor of Business History at the Indian Institute of Management, Ahmedabad, Professor Tripathi pioneered the study of the evolution of Indian business. The Oxford History of Indian Business, 2004, widely hailed as a path-breaking work, was an extensive exposition of Indian enterprises through the ages and, more particularly, of the growth of modern industry in the colonial period. The post-colonial sequel was a natural progression, given the growing importance of business in India, Professor Tripathi explains in the preface. He adds, however, that the new work also had to take into account the context of "how the enterprise system, both private and public sectors, reacted to the changing government stance from time to time".
Thus, this volume recounts changes in economic policy and the business environment from 1947 to 2005, elaborating on the transition of top business groups through these years. The experiences of the Tatas, Birlas and other established groups as well as the rise of new business houses and the decline of others make an absorbing story, pointing to the immense impact that policies have on business and economic growth.
Amid the wealth of narratives, two important sub-themes stand out as relevant to present times. The first is the trenchant and honest critique of the "tumultuous decade" of the 1970s. Defining the Nehru era as the period between 1947 and 1969, the authors point out that the first few policy documents, such as the 1948 Industrial Policy Resolution and the First Plan, do not mention the word "socialism" and that all the established Indian business houses gained considerably in this period.
Most of the ills of the Indian economic environment can, thus, be attributed to later policies, such as the Monopolies and Restrictive Trade Practices Act, which were not only radical but far to the left of the Nehruvian model. "Inefficiency, misgovernance, sycophancy, and corruption were the inevitable consequences of such an environment," the authors say. "Practically every segment of the development strategy evolved during Nehru's times was, as a result, overstretched, distorted, and mutilated to accommodate the interest of those who were in a position to ingratiate themselves to the powers-that-be and their hangers-on," they add. At a time when India's GDP growth has slipped to below five per cent and private investment has collapsed, it is useful to recall that so-called pro-poor economic policies earlier also resulted in subpar growth.
A second significant contribution of the book is the detailed narrative on public sector enterprises. Notably, their beginnings were unhurried and they mostly came up in sectors that were no threat to private enterprise of the day. The 1969 bank nationalisation was a "watershed, and populism further led to nationalisation of coal and general insurance and takeover of sick units like the venerable Andrew Yule & Co. As a result of indiscriminate expansion, the public sector emerged by the beginning of the 1980s, a vast conglomerate of heterogeneous industries - a veritable leviathan dominating almost every branch of the nation's business," the authors explain. Nehru's careful balancing of private and public sectors was disturbed even as government-owned firms made "colossal" and continuous losses.
Despite the improvement in performance later, this historical experience suggests that the debate on disinvestment and privatisation has been unfairly relegated to the periphery, while the state continues to bear heavy losses in keeping public sector enterprises afloat.
After "proto-liberalisation" in the 1980s, the reforms in 1991 - forced by the International Monetary Fund following the foreign exchange crisis - "opened up a vast new vista of opportunities". New enterprises came up in sectors opened up by technology such as IT and pharma; industries such as automotive that benefited from domestic demand; sectors that were liberated from the public sector such as telecommunications, media and civil aviation; and trade and finance. The rapid globalisation of Indian firms is correctly described as "momentous".
A big gap in the volume is that it pertains almost solely to large business groups and public sector enterprises, although co-operatives are mentioned in an appendix. The dynamic small and medium sector, which faced its own turmoil in the changing business atmosphere and whose contribution is by no means insignificant, deserves a separate history. The book ends in 2005 with chapters on changes in family businesses and the rise of a managerial class, thereby leaving the global economic crisis and its aftermath to a later volume.
Liberalisation may have opened new avenues for the private sector, but private industry's primacy as an instrument of growth has been neither adequately acknowledged nor sufficiently leveraged, readers of The Oxford History of Contemporary Indian Business would conclude. If the intention of historical study is to avoid the mistakes of the past and better inform the decisions of the present, then the authors admirably serve this purpose.
The reviewer is author of a forthcoming book on Indian companies after 1991
THE OXFORD HISTORY OF CONTEMPORARY INDIAN BUSINESS
Dwijendra Tripathi, Jyoti Jumani
Oxford University Press; 283 pages; Rs 2,995
