The Politics of Industry in Nehru's India

Tyabji, Nasir (2015): The Politics of Industry in Nehru's India. Published in: Nehru Memorial Museum and Library, Occasional Paper, History and Society No. New Series, 67 (2015)

Abstract

The paper argues that the Indian Managing Agencies that controlled most industrial firms and their associated enterprises were themselves embodiments of pre-industrial forms of capital, accumulated through trading and moneylending. This militated against technological dynamism within the industrial firms because the managing agencies applied a profit maximising calculus across their various business activities, rather than in relationship to any individual firm. The group structure, in fact, facilitated the leakage of surpluses generated in industrial activity into the parallel speculative and money lending interests of the Managing Agents. After independence, the Government’s attempts to reform the industrial sector met resistance from politically influential businessmen who had supported the national anti-colonial movement. The British Government also interceded here. The social engineering that these reforms entailed, embodied in legislation, was thwarted by the combined pressures exerted by affected businessmen, but this should not prevent an appreciation of what the state was attempting.

• Item Type: MPRA Paper
• Language: English
• Keywords: Managing Agencies, Merchant Capital, Usury Capital, Indian entrepreneurship
• Subjects: D - Microeconomics > D2 - Production and Organizations > D22 - Firm Behavior: Empirical Analysis; G - Financial Economics > G3 - Corporate Finance and Governance > G38 - Government Policy and Regulation; K - Law and Economics > K2 - Regulation and Business Law > K23 - Regulated Industries and Administrative Law; K - Law and Economics > K4 - Legal Procedure, the Legal System, and Illegal Behavior > K42 - Illegal Behavior and the Enforcement of Law; M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M1 - Business Administration > M14 - Corporate Culture ; Diversity ; Social Responsibility; N - Economic History > N2 - Financial Markets and Institutions > N25 - Asia including Middle East; P - Economic Systems > P1 - Capitalist Systems > P12 - Capitalist Enterprises; P - Economic Systems > P1 - Capitalist Systems > P16 - Political Economy

References

Primary Sources

Private papers consulted in the Archives of the Nehru Memorial Museum and Library:

Jawaharlal Nehru Papers (JN).

T.T. Krishnamachari Papers (TTK).

Secondary Sources

Anstey, Vera (1942). The Economic Development of India 3rd Ed. (London, Longmans, Green and Co.).

Bagchi, Amiya Kumar (1972). Private Investment in India 1900–1939 (Cambridge, Cambridge University Press).

Bhagwati, Jagdish N. and Padma Desai (1970). India: Planning for Industrialisation (London, Oxford University Press).

Birla, G.D. (1944). “Industrialization in India”, Annals of the American Academy of Political and Social Science, 233: 121–26.

Bombay Shareholders’ Association (1936). The Indian Companies Act (Amendment) Bill, 1936: Memorandum Submitted by the Committee of the Bombay Shareholders’ Association (Bombay, Bombay Shareholders’ Association).

—— (1949). Amendment of the Indian Companies Act: Memorandum of the Bombay Shareholders’ Association on Managing Agents (Bombay, Bombay Shareholders’ Association).

Brimmer, Andrew F. (1955). “The Setting of Entrepreneurship in India”,The Quarterly Journal of Economics, 69 (4): 553–76.

Buchanan, D.H. (1934). The Development of Capitalistic Enterprise in India (New York, Macmillan).

Chibber, Vivek (2004). Locked in Place: State-Building and Late Industrialization in India (New Delhi, Tulika Books).

Chicherov, A.I. (1971). India: Economic Development in the 16th–18th Centuries: Outline History of Crafts and Trade (Moscow, Nauka Publishing House).

Dillard, Dudley (1980). “A Monetary Theory of Production: Keynes and the Institutionalists”, Journal of Economic Issues, XIV (2): 255–73.

Dobb, Maurice (1963). Studies in the Development of Capitalism (London, Routledge and Kegan Paul).

Gadgil, D.R. (1971). The Industrial Evolution of India in Recent Times 1860–1939 (5th ed.) (New Delhi, Oxford University Press).

Goswami, Omkar (1982). “Collaboration and Conflict: European and Indian Capitalists and the Jute Economy of Bengal, 1919–39”, Indian Economic Social History Review, 19(2): 141–79.

—— (1985). “Then came the Marwaris: Some aspects of the changes in the pattern of industrial control in Eastern India”, Indian Economic Social History Review, 22(3): 225–49.

Grajdanzev, Andrew J. (1943). “India’s Wartime Economic Difficulties”, Pacific Affairs, 16 (2): 189–205.

Habib, Irfan (1969). “Potentialities of Capitalistic Development in the Economy of Mughal India”, Journal of Economic History, 29(1): 32–78.

India (1931). The Indian Central Banking Enquiry Committee 1931 Volume I, Part I—Majority Report.

——(1958a). Commission of Enquiry into the Affairs of the Life Insurance Corporation of India—Report.

——(1958b). Report of the Life Insurance Corporation Inquiry [Vivian Bose, Chairperson].

——(1963). Commission of Inquiry: Inquiry on the Administration of Dalmia-Jain Companies,1956—Report [Chairperson: S.R. Tendolkar, Vivian Bose].

Kling, Blair B. (1966). “The Origin of the Managing Agency System in India”, The Journal of Asian Studies, 26(1): 37–47.

Lamb, Helen B. (1955). “The Indian Business Communities and the Evolution of an Industrialist Class”, Pacific Affairs, (28)2: 101–16.

Levkovsky, A.I. (1966). Capitalism in India: Basic Trends in its Development (Delhi, People’s Publishing House).

Lokanathan, P.S. (1935). Industrial Organisation in India (London, George Allen and Unwin).

Markovits, Claude (1985). Indian Business and Nationalist Politics 1931–39: The Indigenous Capitalist Class and the Rise of the Congress Party (Cambridge, Cambridge University Press).

Mehta, Asoka (1949). Economic Consequences of Sardar Patel (Hyderabad, Chetna Prakashan).

——(1950). Who owns India? (Hyderabad, Chetna Prakashan).

Misra, Maria (1999). Business, Race, and Politics in British India c.1850–1960 (Oxford, Clarendon Press).

Mitchell, Kate (1942). “India’s Economic Potential”, Pacific Affairs, 15(1): 5–24.

Morris, Morris D. (1982). “The Growth of Large Scale Industry to 1947”, in Dharma Kumar, (ed.), The Economic History of India: Volume 2, c. 1757–c. 1970 (Hyderabad, Orient Longman).

Mukherjee, Aditya (2002). Imperialism, Nationalism and the Making of the Indian Capitalist Class (New Delhi, Sage Publications).

Papendieck, Henner (1978). “British Managing Agencies in the Indian Coalfield”, in Rothermund and Wadhwa (eds), Zamindar, Mines and Peasants, (Delhi, Manohar), pp. 165–220.

Pavlov, V.I. (1978). Historical Premises for India’s Transition to Capitalism (Moscow, Nauka Publishing House).

Rangnekar, D.K. (1958). Poverty and Capital Development in India: Contemporary Investment Patterns Problems and Planning (London, Oxford University Press).

Ray, Rajat K. (ed.) (1992). Entrepreneurship and Industry in India (New Delhi, Oxford University Press).

Ray, Rajat Kanta (1979). Industrialization in India: Growth and Conflict in the Private Corporate Sector, 1914–47. (New Delhi, Oxford University Press).

Reserve Bank of India (1954). All India Rural Credit Survey: Report of the Committee of Direction Volume II The General Report (Bombay, RBI).

Roy, Tirthankar (1999). Traditional Industry in the Economy of Colonial India (Cambridge, Cambridge University Press).

Stevens, Bertram (1941). “The Eastern Group Supply Council”, The Australian Quarterly, 13(3): 9–18.

Streeten, Paul and Michael Lipton (eds) (1968). The Crisis of Indian Planning: Economic Policy in the 1960s (London, Oxford University Press).

Tyabji, Nasir (1989). The Small Industries Policy in India (Calcutta, Oxford University Press).

—— (2000). Industrialisation and Innovation: The Indian Experience(New Delhi, Sage Publications).

—— (2009). “Of Traders, Usurers and British Capital: Managing Agencies and the Dalmia-Jain Case”, in S.R. Hashim et al. Indian Industrial Development and Globalisation Academic Foundation, New Delhi).

——(2010). “Private Industry and the Second Five-Year Plan: The Mundhra Episode as Exemplar of Capitalist Myopia”, Economic & Political Weekly, XLV, 32: 47–55.

Wadia, P.A. and K.T. Merchant (1957). Our Economic Problem (Bombay, Vora).