Dr. Raman Mahadevan
Institute of Development Alternatives
09-Jan-2008
Dr. Raman Mahadevan is a senior economic and business historian based in Chennai. His principle areas of interest are industrial history; evolution, growth and structure of Indian Capital and labour history. At ASB, he spoke on development of industrial entrepreneurship in India.
Profile of the Speaker: Much of Dr. Mahedevan's work pertains to Southern India. He is deeply interested in the present and especially in understanding how the past influences the present. Some of these concerns were reflected in his fortnightly column 'Past is Present' in the 'Financial Express'. He has worked in several institutions of repute across India including a brief stint at IIM Bangalore and a fairly long innings at CDS Trivandrum.
He is presently a Professor at the Institute of Development Alternatives Chennai. He has several publications to his credit.
Session
Session: The session started with a detailed explanation on British association with India and resultant changes that occurred on the trade front. The Civil War in the UK in the mid-17th century had disrupted the supply of cotton to the mills in Manchester and Lancashire. The search for an alternate source of supply drew Britishers to India – a land of abundance. But there was no unified India at that time. There was hardly any infrastructure, and the trade – agro products and coal – was concentrated in the hands of few merchant communities, like the Marwaries, Gujarathis, Lohanas and Chettiar, who were basically money lenders and kept the internal trade well oiled.
Since Britishers had no direct access to the producers, they were dependent on the merchant communities for supplies. This allowed the Indian traders to accumulate wealth and also finance India’s internal trade. With UK having no produce to give back to India, the trade relation became imbalance causing massive inflow of gold to India and ultimately became the cause for UK to assume power in India.
The modernisation of India started with Britishers making investments in India. The foreign investments in railways and telegraph laid the basis for organised commercialisation. With steady support and a ready export market, India’s agro based industries – cotton, jute, sugar, plantations – prospered. The rising demand for textile following the Industrial Revolution ushered the need for cotton and textile mills. Again the merchant community with its surplus cash and their ability to mobilize funds had the advantage over others, to establish mills and other manufacturing establishments.
By this time, a dual structure of trade had began to evolve, a concentrated hub of Europeans in cities like Bombay, Calcutta, Madras and a parallel organised setup by the merchant communities of India, who financed the internal trade and economy. They further progressed having first mover advantage in manufacturing. These communities were closed groups, cash rich, making the entry barriers for others, very high. And hence for a large part of the 19th century, trade was again concentrated in their hands.
But in 1980s, the scene began to change. With loosening of control, the green revolution, electronic revolution, the growing relevance of knowledge capital, computerisation and growth of IT, a new class of entrepreneurs emerged who were not from the merchant community but had their roots in agriculture. They were highly educated and specialized in technical know-how. And this know-how was commercialized in the form of a business venture. Later, with IT coming to prominence, professionals started getting into business. This pattern of evolution of industrial entrepreneurship in India follows the industrial entrepreneurship process – financial surplus used for developing technical know-how, finally translating into entrepreneurship.
In spite of the tremendous growth made by India, the historic skewedness in economic and social development of the masses still remains. Efforts should be made to bridge the gap between the haves and have-nots.
