THE ECONOMIC W E E K L Y
Creative Response in Indian Economy
AN a t t e m p t is made in this paper
to understand the b a c k g r o u n d
of the creative response in I n d i a n
economy, more specifically, the entre-
preneurial role of I n d i a n s , a n d n o t
non-Indians i n I n d i a . The same
logic w o u l d perhaps apply to a l l the
sectors of economic life, b u t the
a t t e n t i o n is here focussed, f o r the
sake of s i m p l i c i t y , on the n o n - a g r i -
c u l t u r a l sector of I n d i a n economy.
T h i s analysis w o u l d be applicable,
m a i n l y , t o trade, transport, b a n k i n g
and i n d u s t r y * .
Comparison or r a t h e r contrast of
I n d i a ' s slow development in the 19th
century when the Western nations
experienced a great upsurge in crea-
tive response has been an i n t r i g u i n g
problem in entrepreneurial h i s t o r y .
It is, therefore, the 19th century
development in I n d i a t h a t is chosen
f o r the analysis. Economic develop-
m e n t h a d been "arrested" in I n d i a .
( A n s t e y V e r a : The Economic Deve-
lopment o f I n d i a . F o u r t h E d i t i o n .
1952, L o n d o n , p 5 ) . T h i s phenome-
non has a t t r a c t e d the a t t e n t i o n of
economic historians in the West a n d
m a n y explanations have been a t t e m -
pted in the past. It is necessary to
see h o w f a r t h e y "explain", before
we proceed in t h a t direction.
The t r a d i t i o n a l explanation has
usually concentrated on "the social
organisation, based upon r e l i g i o n , "
. . . . " T h e o u t s t a n d i n g result o f a l l
these forces has been t h a t the peo-
ples of I n d i a are divided i n t o a
large number of religious and social
sects, classes or castes, each of w h i c h
'keeps itself to i t s e l f maintains
p u r i t y of descent a n d its o w n social
ideals and customs, a n d controls in
detail the mundane a c t i v i t i e s . . . . o f
a l l its members. Social s t r a t i f i c a t i o n
has thus become an apparently
i r r e m o v a b l e fetter on m a t e r i a l pro-
gress. ,. .caste rules determine the
choice of occupations, w h i c h are
' I take this o p p o r t u n i t y t o t h a n k
a l l those w h o have helped me in this
paper by t h e i r discussion and com-
ment, i n p a r t i c u l a r : D r . Helen L a m b ,
Professor of Economics at the Cen-
ter f o r I n t e r n a t i o n a l Studies, M . I . T .
P r o f M N Srinivas a n d Dr I P Desai
of Baroda University and Dr I r a v a t i
K a r v e of Deccan College ( P o o n a ) .
A Regional Analysis
Mrs D P Pandit
followed as i n h e r i t e d callings, not
as a means to greater prosperity."
( I b i d . , pp. 47, 52 a n d 53.) T h i s type
of explanation about H i n d u society
is supposed to be i n d i r e c t l y suppor-
ted,: the Parsee e l e m e n t — w h i c h can
h a r d l y be considered as t y p i c a l l y
' I n d i a n ' exercises an influence out
of a l l proportion to its numbers."
( I b i d . , p. 232.)
S i m i l a r explanations are encoun-
tered again a n d again. " I n I n d i a a
m i x e d group, either Europeans or
persons f r o m outside the native
I n d i a n population and not subject to
the pressure of the ancient scheme
of things, has led the i n d u s t r i a l
movement, a l t h o u g h some 'pure'
I n d i a n s have also t a k e n a p a r t . "
(Buchanan, D H: The Development
o f C a p i t a l i s t Enterprise i n I n d i a .
1934. N e w Y o r k , p. 142. ) "There has
been some special a c t i v i t y a m o n g
other i m m i g r a n t groups, more close-
l y associated w i t h the Indian
population, the most conspicuous
being the Parsees w h o m i g r a t e d f r o m
Persia in the e i g h t h century
R a c i a l l y a n d c u l t u r a l l y distinct, they
have never identified themselves w i t h
any I n d i a n group a n d to this fact is
largely due their v e r y i m p o r t a n t
place in economic development."
( i b i d pp 142-3).
There have been conflicting expla-
nations by the same historians.
C o m p a r i n g the p a r t played by crafts-
men in the creative response in the
West the fact t h a t I n d i a n s were v e r y
m u c h poorer, "specially to start a
factory, f u l l g r o w n as factories came
to I n d i a " is also noted as a possible
explanation a l o n g w i t h the heredi-
t a r y social relationships etc.(ibid p
145-6). A n o t h e r explanation, for the
so called t r a d i n g caste, "baniya",
runs as f o l l o w s : "Paradoxically, the
conditions w h i c h brought the f a c t o r y
system t u r n e d t h e m from factory
operation because it also brought
g r e a t l y increased opportunities in
their more s t r i c t l y hereditary lines
of endeavour." ( i b i d p 146.)
A b o u t the other possible recruits,
"The ablest was the B r a h m i n , but
business l a y outside their inherited
sphere they found enlarged op-
portunities in fields more closely
a k i n t o their h e r e d i t a r y occupations.
( i b i d p 147).
283
F e b r u a r y 23, 1957
S i m i l a r "social" explanation is
given for the M o h a m m e d a n group,
said to have c o n t r i b u t e d l i t t l e in
this direction, and not w e l l fitted
for i n d u s t r i a l leadership.
W h a t e v e r did not fit the explana-
t i o n was considered exceptional, and
the conclusion was couched in such
terms: "Here and there, i n d i v i d u a l s
or f a m i l i e s . .. .have broken away,
and while the B r i t i s h and the Parsees
have been the most successful as
groups, various Hindus a n d M o h a -
mmedans have done remarkably
w e l l in i n i t i a t i n g business." ( i b i d p
148). In w h a t w a y can we explain
those who have thus "broken away"?
They are just there to be consistently
explained! There need not be any
explanation if they are distributed
at r a n d o m a l l over the I n d i a n
scene, but perhaps they represent
a special element, a p a r t i c u l a r force
i n the I n d i a n c o m m u n i t y . These
exceptions are not individuals, nor
families, but "entrepreneurial com-
m u n i t i e s " ! More recent explanations
r u n in terms of the "Business C o m -
munities,"'
The major communities listed are:
1. The Parsees, 2. The G u j a r a t i s , 3.
The M a r w a r i s . The Gujaratis and
the M a r w a r i s are regional groups,
h a i l i n g f r o m Gujarat and M a r w a r
respectively. The regional approach
at once makes nonsense of the older
approach in terms of r e l i g i o n or
caste, but this " r e g i o n a l " logic has
not been pursued further, or more
f u l l y . We find the Parsee c o m m u -
n i t y listed as a religious c o m m u n i t y ,
distinct f r o m the Gujaratis, even
t h o u g h Parsees h a v i n g settled in
Gujarat are Gujaratis l i k e any other
religious groups of Gujarat. They
speak G u j a r a t i and have produced
(i) "Notes on the Rise of the
Business Communities i n I n d i a "
1951. P r e l i m i n a r y Memorandum.
I n s t i t u t e of Pacific Relations. New
Y o r k 1951. (Prepared by the Staff
of the Gokhale School of Politics
and Economics, Poona, I n d i a ) .
(ii) Helen L a m b : T h e Develop-
ment of Modern Business c o m m u n i -
ties in I n d i a " . 1954. Proceedings
of the Conference on H u m a n Resour-
ces and L a b o u r Relations in under-
developed countries.
THE ECONOMIC W E E K L Y
men of l i t e r a t u r e , in the same l a n -
guage a n d they wore the same dress
as a G u j a r a t i H i n d u in 19th century
Bombay.
I n f a c t even the communities w i t h
regional labels are s t i l l explained in
the context of castes. " T r a d i n g was
n o t l i m i t e d to certain groups by
caste-prescriptions but, as it has
w o r k e d out, groups with trading
t r a d i t i o n s have carried on most of
the trade of I n d i a w h i c h was not
i n B r i t i s h hands." . . . . " M o s t busi-
ness communities combine caste; ie,
the bania t r a d i n g a n d moneylending
caste, w i t h place of o r i g i n . .. .Guje-
r a t i businessmen belong to the
money-lending castes o f G u j a r a t . . . .
I t i s interesting t o note that, u n t i l
n o w at least, the banias o r i g i n a t i n g
i n Western I n d i a a n d subscribing
to the J a i n f a i t h have been the most
enterprising in developing m o d e r n
industries." (Helen L a m b : pp 109
a n d 113.) T h i s line of description is
f u l l of the c l i n g i n g influence of the
older approach, l o o k i n g for caste a n d
r e l i g i o n to give some possible ex-
planation.
Let. us t r y to understand Gujeratis
alone at present;—Gujeratis of a l l
castes a n d religious beliefs.
point needs to be cleared up as re-
gards one misconception about the
role of caste. " C o n t r a r y to popu-
l a r impression, the t r a d i t i o n a l c a l l -
i n g is not unchangeable."*
sociological observation is confirmed
every day, every where in I n d i a even
in the past. C o n c e n t r a t i n g on the
caste-behaviour in G u j a r a t :
B a h a d u r R a n c h o d l a l C h o t a l a l , the
pioneer of cotton textile i n d u s t r y in
Ahmedabad, Gujarat, was neither a
trader, nor a money-lender by caste.
He belonged to " N a g a r - B r a h m i n
caste. a top-grade a m o n g the
B r a h m i n s too! A n i m p o r t a n t Guja-
r a t i businessman, the well-known
Sir L a l u b h a i Samaldas, the father
of the present I n d i a n ambassador
to U S A , descended f r o m a d i s t i n g u i -
shed f a m i l y of Dewans, the minis-
ters s e r v i n g the Maharaja
B h a v n a g a r . They were N a g a r by
caste, a n d a d m i n i s t r a t o r s by t r a d i -
t i o n ! Rajputs i n G u j a r a t have t a k e n
interest in business inspite of their
t r a d i t i o n as rulers. A ruler of R a j -
*Srinivas M N 'Social System of
a Mysore V i l l a g e in " V i l l a g e I n d i a
—Studies i n the L i t t l e C o m m u n i t y . "
E d i t o r s : M a r r i o t t M c k i m a n d Singer
Redfleld, Chicago. 1955.
Badshah, B R: The L i f e of R a o
Bahadur Ranchodlal Chotalal, C I E ,
B o m b a y 1899. p 1.
F e b r u a r y 23, 1957
peepla was one of the early " f a i t h - of B r a h m a n i c a l religion. There are
f u l " w h o promised to help the for- m a n y entrepreneurs f r o m the ' V a i -
mation of the company by the shnav' sect in A h m e d a b a d too, a n d
Ahmedabad pioneer. ( i b i d p 16). m a n y more in the other parts of
The smaller princes of G u j a r a t and G u j a r a t . Banias, especially of K a p o l
Kathiawar, (modern Saurashtra, division, c o m i n g f r o m K a t h i a w a r t o
c u l t u r a l l y a n d l i n g u i s t i c a l l y a Guja- Bombay, a n d B h a t i a s were b o t h
r a t i region), have a l w a y s supplemen- H i n d u groups of " V a i s h n a v " sect.
ted their income by some business As regards the p r o p o r t i o n of differ-
or the other. P a t i d a r s of Gujarat, ent religious communities in the
i m p o r t a n t business group of the pioneering of cotton t e x t i l e i n d u s t r y
region, come from t r a d i t i o n s of in I n d i a after the Parsee pioneer of
farming rather than trade, a n d 1854, we find 14 names in the next
Bhatias of Kathiawar a n d K u t c h 20 years (1854-1874) in B o m b a y a n d
( G u j a r a t border), who have been A h m e d a b a d , of w h i c h 7 were Hindus,
active in B o m b a y since the beginning (5 f r o m Bombay, and 2 from
of 19th c e n t u r y c l a i m to be B h a t i A h m e d a b a d ) , 5 Parsees a n d 2
Rajputs, the name B h a t i or B h a t i a Mohammedans. (Centenary of the
being derived f r o m the S a n s k r i t T e x t i l e I n d u s t r y of I n d i a 1854-1954
'bhat', a w a r r i o r . (Gazetteer of especially p 127.)
Bombay City and Island. V o l 1, This p r o p o r t i o n i n c i d e n t a l l y dis-
B o m b a y 1909, p 169). M a n y crafts- proves the belief of disproportion-
men of the lower castes, a n d other ately large Parsee element, or even
poorer H i n d u s begin in a s m a l l way, disproportionately s m a l l M o h a m m e -
sometimes in construction w o r k , dan element. The Parsees h a d settled
bus transport, a n d s m a l l flour m i l l s m o s t l y in coastal towns of Gujarat,
etc. The exception of the untoucha- and had easily m i g r a t e d to Bombay,
bles is easy to understand. j u s t as the H i n d u s of the coastal
N e i t h e r " G u j a r a t i " n o r M a r w a r i towns l i k e Surat, Gogha, and those
entrepreneur can be explained by of K u t c h had settled sooner, in the
J a i n i s m a t a l l . I f so, J a i n i s m i n g r o w i n g p o r t o f B o m b a y . (Gazetteer
A other regions, especially Bengal, has of B o m b a y C i t y a n d Island, V o l I
apparently led to a different outlook 1909 B o m b a y pp 168 and 194). The
on l i f e . Gujaratis of a l l religious entrepreneurs in the interior of Guja-
beliefs have provided the entrepre- rat, were m o s t l y Hindus and M o h a -
neurs. T h e Jains have been i m p o r - mmedans, t h o u g h very often on a
This t a n t i n A h m e d a b a d , but the P a t i - smaller scale. A l l these G u j a r a t i
dars also active in Ahmedabad, are entrepreneurs taken together show
Rao
of
285
F e b r u a r y 23, 1957
Parsees t a k i n g no more t h a n their
r i g h t f u l place in the c o n t r i b u t i o n
made by G u j a r a t i c o m m u n i t y of
I n d i a . T a k e n as a distinct religious
group of I n d i a as a whole, their role
seems spectacular, but misleading
for any i n t e r p r e t a t i o n . Gujarati
Mohammedans were, almost a l l ,
H i n d u converts (ibid pp 178-182) and
their names are very frequent-
l y indistinguishable f r o m H i n d u
names. They had no sociologi-
cal reason to behave differently
f r o m other Hindus, except t h a t these
converts were poorer sections, to be-
g i n w i t h a n d t o o k time to rise up.
Gujarat, as a distinct linguistic, cul-
t u r a l group, thus, claims to be an
B o m b a y F o r t Office :
Sir Pherozeshah M e h t a Road
A h m e d a b a d Office :
18 Relief Road, K a l u p u r
exception to a l l the older assump-
tions. This rise of entrepreneurs in
Gujarat, and not everywhere else,
needs a new hypothesis.
We have seen t h a t the t r a d i t i o n a l
occupations are not unchangeable.
This is a negative statement applic-
able to the I n d i a n c o m m u n i t y as
a whole. B u t it is o n l y part of the
story. W h y a n d how the occupa-
tions are changed is in fact, the
heart of the social dynamics. The
concentration on the static model,
" s t r u c t u r e " of caste at any moment
of time has led us astray for a
l o n g time. The dynamic pointers
were there, but they had been dis-
regarded, a n d misjudged even by the
I n d i a n students. I t was realised t h a t
though caste was defined as "an
endogamous group or collection of
such groups bearing a common name
and h a v i n g the same t r a d i t i o n a l
occupation", the occupational basis
of caste was not ubiquitous. "Castes
formed by changes in customs or
occupations", should have been a
special pointer. B u t this pointer
failed to prove the d y n a m i c element
in the caste for such a l o n g time.
(Anstey V e r a . op.cit,"p 47.) I t i s
only recently realised t h a t the caste
is a principle, and not a structure.
The principle alone survives but the
structure has changed again and
again.
The change, when forced by the
circumstances, has no interest for
us B r a h m i n s have become cooks,
and Rajputs have become farmers,
all over I n d i a , when they lacked the
capacity or the o p p o r t u n i t y to earn
a decent livelihood in the t r a d i t i o n a l
occupation. One has no enthusiasm
in the occupation to w h i c h one is
pushed down, and therefore no
wonder if Rajputs w i t h such "pushed
d o w n " feelings are not good f a r m -
ers. On the other hand a change
out of a m b i t i o n is c u l t u r a l l y chanel-
lised. Social h i e r a r c h y of occupa-
tions guides the decision. This so-
cial g r a d a t i o n is very flexible and
responsive to the locally significant
criteria. This gives us different
systems of 'occupation r a n k i n g ' in
different "communities "
The w o r d " c o m m u n i t y " here f o l -
lows the concept used by the cul-
t u r a l anthropologists. The villages
are treated as "the L i t t l e C o m m u n i -
ties" while s t u d y i n g the c u l t u r a l
complex w i t h i n a village. W o r k i n g
on the hypothesis of interdependence
and i n t e r a c t i o n given by M c k i m
M a r r i o t t f o r the I n d i a n villages, we
286
THE ECONOMIC W E E K L Y
can create an intermediate regional
model, itself a p a r t of the inter-
dependence system. "The L i t t l e
C o m m u n i t y " at the village t o w n
level, the regional c o m m u n i t y at the
intermediate level, and the larger
c o m m u n i t y at the level of the " u n i -
versalised" I n d i a n culture, a l l inter-
act w i t h one another. A m a n is
p r i m a r i l y a member of his l i t t l e
c o m m u n i t y , a n d thus he is guided
by the social prestige-norms of his
immediate neighbourhood The re-
gional c o m m u n i t y under the direct
impact f r o m the " u n i v e r s a l i s a t i o n "
of c u l t u r a l values of the various
" l i t t l e communities" of the region,
contributes in r e m a k i n g a l l the l i t t l e
communities in a more or less com-
mon pattern.
Some such interaction process in
G u j a r a t has given a special set of
values to the G u j a r a t i c o m m u n i t y .
Such a c u l t u r a l product of local his-
t o r y and local reactions to the acci-
dents of history, is the G u j a r a t i
occupational hierarchy, a guide to
the choice of occupations, not o n l y
by the ambitious individuals, but
sometimes by the whole segments of
"castes" to make new "superior
castes."
The fact of such occupational
changes is also universal in
I n d i a but the direction of the change
is peculiar to each region, according
to its ranking-system. G u j a r a t i set-
t i n g put a prestige-value on busi-
ness w h i c h no other region d i d .
Business of course, w i t h its corres-
ponding w a y of life) was r a n k e d
higher not only to m a n u a l and un-
skilled w o r k , but also higher t h a n
a l l other occupations. It is o n l y
the influence of the s t i l l larger com-
m u n i t y , i e, the I n d i a n culture, t h a t
modifies this r a n k i n g and continu-
ously tries to get an equal place
(at l e a s t ! ) for other occupations,
connected w i t h learning, and profes-
sions. It is only in Gujarat t h a t
a top-grade B r a h m i n or men of
equally t o p - r a n k i n g caste, Nagar,
can change to b a n k i n g and industry,
w i t h o u t being derided by the society,
and w i t h o u t being criticised by their
castes. A G u j a r a t i B r a h m i n g o i n g
i n t o trade and industry becomes a
m a t t e r of pride to his regional caste,
whereas in M a h a r a s h t r a , even to-
day, a less paid m a n in the Govern-
ment service or in professions is a
more eligible bridegroom, in com-
parison w i t h the trader.
( T o be continued)