Review Article

Of Big Business and Indian Politics

Anirban Biswas

Students, not necessarily scholars, of Indian economic history, particularly her industrial history, can understand that there is not much systematic study of the rise of the organizations of Indian business, their conflicts (and collaborations) with European businessmen operating in the Indian economy, their political attitudes and their relations with the Government of India in the post-independence period. The *Book under review is one such commendable attempt. Although titled The Rise of the Indian Business Class, it does not examine the genesis of this class and its development, but dwells on their organizations, their inner conflicts and their relations with the ruling political forces. It should be admitted that there are some really good works on the genesis and growth of Indian big business, e.g. those by D H Buchanan, Amiya Kumar Bagehi, V I Pavlov, Suniti Kumar Ghosh etc. The focus of this work is different. While it studies the various business organizations and their relations with political authorities, the emphasis is on FICCI (Federation of Indian Chambers of Commerce and Industries). The period covered is from the early Swadeshi era and the birth of FICCI till the devaluation of 1966.

As one goes through the book, one must feel impressed by the painstaking labour undertaken by the author in the preparation of the book. It has many interesting things to offer in the very first chapter, for example, the dualistic relation between the two prominent industrial magnates, namely Purshotamdas Thakurdas and G D Birla, who sometimes formed an alliance and sometimes fell out. In this chapter, the author also points out the differences between the textile millowners of Bombay and those of Ahmedabad, and tries to explain why the latter stayed out of FICCI. The former was evidently much more inclined towards the British than the latter. The author has tried to explain this with the following argument.

"The Ahmedabad millowners had begun to specialise in the production of better quality products, in whose market they had to fight the supremacy of the Lancashire interests. The Bombay millowners on the other hand did not produce the superior quality textiles, and feared Japanese competition more than that from Lancashire. Unlike the Ahmedabad millowners, therefore, the Bombay millowners did not have an immediate major clash of economic interest with the British textile industry". (Pp l4-15) The reader will also be enlightened on the conflict between trading and industrial interests reflected in the proceedings of the FICCI. To the question why smaller businessmen, despite their disenchantment with the elite control of the FICCI, remained with it the answer given by the author is that since FICCI was the most influential of all chambers, the smaller businessmen chose to remain within it and to fight an unequal battle. This answer is not, however, very convincing, because if the fighters realize that the battle is perpetually unequal there is no reason why they should remain there permanently.

In the second chapter of the book the author examines the attitude of the business class towards the various phases of the Congress-led national movement, the Congress-led provincial ministries and Congress thoughts on planning. The author has provided much information about the conflicting thoughts existing within the Congress and the business class's response to it. In response to Nehru's advocacy of socialism and 'ending of private property', the Bombay businessmen issued a manifesto attacking socialist ideas, but G D Birla, the shrewdest of Indian capitalists, felt that the ‘manifesto’ would do more harm than good to Indian business. Nehru's socialist rhetoric was however in effect thrown into the wastepaper basket and there was increasing convergence of interest between the Congress and big business. Earlier, this convergence was only partially existent, and there was even an unsuccessful attempt by some Bombay industrialists to form a capitalist party in opposition to the Congress. The author's description of this convergence is commendable, as also his mention of the Lees-Modi Pact of 1933, which partly succeeded in dividing big business. About the political attitude of the business class during the pre-independence period, the author has made a trenchant and substantiated remark worth noting, "Despite diverging political approaches, all big business groups generally opposed mass agitations which they considered a potential threat, even in independent India, particularly if they were permitted to be prolonged. While the Tata-led group was more forthright in its opposition, the Birla-led one sought to apply pressure on the Congress to withdraw mass agitations," (P 90) It is ironic that this history of the Tatas has been forgotten by the mainstream paliamentary left as well as by Congressmen. The Tata group was hailed as Bhartgaurav (Glory of India) by a senior Congress leader and the CPI(M)-led Government gave it large freebies in the name of industrialization and development in West Bengal. The author's description of the Bombay Plan is informative, but not sufficiently explicit. The episode of Bombay Plan is, however, known to many, but that is not the case with the People's Plan drawn up by Tarkunde, Parikh and Banerjee in 1944. By drawing people’s the attention to it, the author seems to have done a valuable service. But his remark that since the Radical Democratic Party was not a major political force, the plan was ‘‘virtually ignored by Indian big business interests’’. From the author’s description of the Plan, it is clear that Indian big business’s lack of interest was only to be expected. But that is not reason enough for its receding into oblivion. The Communist Party of India and other socialists together constituted a major political force. Didn't they show any interest in the Plan and if they didn't, why? The author could and should have dealt with this question, at least briefly.

Chapter 4 (The Formulation of Industrial Policy, 1944-49) of the book provides much valuable information on the Industrial Policy Statement of 1945, the Advisory Planning Board of the interim government and FICCI's disagreement with its recommendation, the Industries Conference of December 1947,and the Economic Programme Committee of the Congress. The opposition to the recommendations of the latter by G D Birla and Sardar Patel has been clearly outlined, the result of which was that 'efforts made by pro-business forces, including FICCI itself, succeeded in whittling down the recommendations made by the EPC, shortly after they were made'. This process, of which Jawharlal Nehru, for all practical purposes, became an apologist, found its culmination in the Industrial Policy Statement of 1948. It is also clear from the list of the industries where new undertakings were exclusively reserved for the state that they were those industries in which private business groups had little interest, because these business groups did not have the capacity to mobilize enough capital for investment in these industries.

The development of the Industrial Policy in the 1950s was a complicated process, as is clear from the author's meticulous depiction of the debates. The big business, as the author shows with enough documentary evidence, succeeded in extracting all the concessions it wanted. For example, the original draft of the First Five-Year Plan was revied in the face of criticism from big business. The Congress and Jawharlal Nehru, however, had often to maintain a left veneer and this posture was not altogether unsuccessful, as was demonstrated by the results of the Aadhra polls in 1955. The selective nationalization measures were opposed neither by FICCI nor by ASSOCHAM, because they did not stand to lose by these measures. The author's discussion of the Second Five-Year Plan, regarded as the embodiment of the Nehru strategy (considered obsolete by big business ever since the last decade of the last century), is interesting, although it seems not sufficiently elaborate. What comes out is that the Plan Frame drawn by Professor P C Mahalanobis was effectively scuttled—this possibly justifies the use of the term ‘Nehru Mahalanobis strategy’, instead of the ‘Mahalanobis strategy’ by some economists—by the politicians loyal to big business. The big bourgeoisie were not in general opposed to the essence of the Second Five-Year Plan in its final form. Ironically, quite some people were bewitched by the Nehru model or the 'concept of socialistic pattern of society', thinking that it will gradually socialize the means of production and bring about growth with distributive justice. Seeing the resemblance of the Mahalanobis model with the Feldman model of the Soviet Union of the 1920s, some thought it to be a socialist model of planning, forgetting that given the prevailing array of class forces in India, it could only be a caricature of the Feldman model. Even what Mahalanobis prepared was tampered with in order to suit the interests of the big bourgeoisie who finally welcomed it. This convergence of interests has been convincingly demonstrated by the author. Pressing into service a good deal of documentary evidence, he has been able to show how the policy of aggrandizement towards big business led to a neglect of the basic problems facing the people at large and finally led the government towards greater doses of capitulation to the institutions dominated by the USA and advanced European capitalist countries. The author ends with the Industrial Policy Statement of 1965 and the devaluation of 1966 under pressure from the World Bank.

The foregoing is not a complete review of the book, but the more this reviewer has gone through it, the more he has been impressed by the enormity of documentary evidence produced to give a clear picture of the growth of big business in India in collaboration with state power. The treatment of the subject seems sometimes to be more political than economic, but that is no disqualification here, because in the final analysis, politics is the concentrated expression of economics. There is little doubt that it will serve as a handy reference to all interested in the subject, and the relatively uninitiated has much to learn from it. In this sense, this book has filled a gap. A few printing mistakes, however, are there, along with a few faults of construction. It may be hoped that they will be corrected in the next edition.

by Kamal Aron Mitra Chenoy,
Aakar Books, Delhi 110091, 2015, Pages X-342, Price Rs 395.

Vol. 47, No. 32, Feb 15 -21, 2015