Book Review — India’s New Capitalists: Caste, Business, and Industry in a Modern Nation

How did Appejay group get its name? What about M&M? Orpat? How are businesses in South India different from those in North? And those in West? How did Tirupur shape as a textile hub? Sivakasi as fireworks one?

Well, there are books and there are epics. This book by Harish Damodarn easily slips into the second category. If there is one book one needs to figure history of Indian companies and business groups, it is this.  The work is so majestic that one is amazed to learn something new in each para.  It is a pity and shame to discover this book so late as it came in 2008.

CASI, UPenn has an intro of the book:

Business in India has traditionally been the preserve of certain Bania communities clubbed under the Vaishya order of the classical Hindu chaturvarna (four-order) social hierarchy. So deep is this association that the term ‘Bania’ has over generations acquired a generic connotation, used interchangeably to refer to the village moneylender-cum-grocer, general merchant, produce financier or large factory owner. This near-synonymous identification of business with the Bania and vice versa has, however, undergone significant dilution since the early part of the 20th century, which saw the entry of a number of businessmen from the ranks of the Brahmins, Khatris and similar castes with predominantly scribal or administrative background. The post-Independence period has witnessed a further widening of the social base of Indian capital to include various agrarian and allied service castes such as the Kammas, Naidus, Reddys, Rajus, Gounders, Nadars, Ezhavas, Patidars, Marathas and Ramgarhias. As a result, entrepreneurship is today no longer the exclusive bastion of the old mercantile groups: whether Banias, Jains and Marwaris or Sindhis, Lohanas, Bhatias, Parsis, Nattukottai Chettiars, Kutchi Memons, Khojas and Bohras.  Capital’s social profile has expanded considerably beyond the Bania-plus complex to incorporate a wide spectrum of communities. But this ‘inclusive capitalism’ has not followed a uniform pattern across India, being more a feature of the southern and western states. This contrasts with the North, which has not demonstrated a similar churning of the socio-business landscape. Moreover, even within the progressive regions, capital’s ‘democratization’ has not fully permeated to the lowest rung of the social ladder. For instance, country is yet to produce a single Dalit industrialist of note, even while competitive electoral politics and the institution of a welfare state after Independence has thrown up scores of high-ranking leaders, bureaucrats and judges from the erstwhile ‘untouchable’ castes.

India’s New Capitalists traces the modern-day evolution of business communities in India and, for the first time, systematically documents the rise of new entrepreneurial groups with no established pedigree of trading or banking. The book also contains 15 individual case studies that embellish the general findings.

There are many books telling you about how Indian economy shaped up. But these just keep business/firms away from the discussion which isn’t real economics. It is business and firms which form economics. They employ people, develop products and services, generate profits and then pay taxes as well. This is real economics. This book should be recommended/taught to spice the mundane discussions around Indian economy.

The book deserved a better title. Written in 2008 just around crisis, capitalist was perhaps a fashionable word. The title should have been India’s real economists or something like this.

Damodaran wrote this book when he was in Hindu Business Line. Now he is with Financial Express. It is a pity he has not taken to academics with this book. With most of India’s Business schools lacking case studies from the country, this book is just full of them.

Interestingly, the book has been financed by New India Foundation. This is promoted by Ram Guha and Rohini Nilekani to push India’s research in social sciences. The book has good mentorship as just like India after Gandhi, the book sweeps India’s business history in just about 300 pages. And much of the focus is post independence which makes it really exciting.

The book (rather epic) also takes a different perspective on business history. Unlike other books which focus on personalities,  politics etc this one takes the community angle. The focus is on how certain (actually so many) communities have shaped so many businesses across the country. The book tracks most Indian business firms to their communities. In the process, you get lot of clarity on why firms were named like this, their origins, their choice of business etc.

The key insight of the book is that lower communities were more successful in emerging in South India compared to North. In the north, there was already an existing trading community which was better equipped to become factory owners. In South, such intermediation was missing giving communities more chances to make a mark. In the South agrarian community moved to becoming the bug businesses of today, whereas in North there was no such movement.

In today’s world we all like to discard caste, community and so on. But we forget it is the very castes and communities which have shaped India’s mighty enterprises of today. Without the community networks, none of these businesses would haven been possible. In many ways this is similar to global business history as well where communities have played a central role. In India, communities have been more hierarchical in nature giving a bad name to all this.

The book chapters are not the usual ones in business history books like Birlas, Ambanis, Mittals etc. Instead the chapters are titled as Old merchant communities, Brahmins, Khatris and Babus, Kammas, Reddy and Rajus, Kongunad Naidus and Gounders, Patidars and Marathas etc.  The author has tried his best to cover all major communities which have contributed to Indian business and has tried to cover all possible businesses.

Apart from communities, the book also gives insights on why certain places become business hubs. It is a combination of natural geography, political economy, and dedicated individuals which shape these hubs. The places covered are not the usual Delhi, Mumbai but Tirupur, Coimbatore, Sivakasi etc. The regions which are not covered adequately are the East and North East which have had a different kind of history.

The book could easily lead to multiple theses on Indian businesses.  But for this, there has to be interest in these areas. To see just one review in Amazon, zero in Flipart and three in goodreads speaks volumes about interests in these areas.

A friend quipped saying this work is so Pikettesque. He is India’s Piketty. I said the book was written before Piketty’s Capital (both share the word capital). Hence, it should be the other way round.

Terrific stuff Mr. Damodaran. Huge applause. When is the next one coming?

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