Indian Big Business

Jairus Banaji

The evolution of India’s corporate sector from 2000 to 2020

“The systemic, long-term nexus between the political elites and big business will not go away anytime soon,” wrote journalist M. K. Venu in 2015. Writing in the aftermath of Obama’s second visit to India, Venu suggested that “crony capitalism” had to be grasped in a deeper sense to reflect not the odd favors bestowed on this or that industrialist by the government of the day, but the system that cemented the ties between state and capital. In this case, it was a handful of family-owned businesses that knew they could always depend on India’s governing class, starting with the prime minister. Venu cited a revealing example of this bond. “At the Modi-Obama reception at Rashtrapati Bhawan [on Sunday 25, 2015], about two dozen industrialists had been invited and were seen standing in a queue to greet the US president. About six to eight of those present collectively owe close to Rs. 3.5 lakh crore1 to banks, mostly public sector undertaking (PSU) banks. The banking industry in India has about Rs.5 lakh crore 2 as total capital and nearly 70 percent of it is exposed to just a half a dozen industrial houses. Technically, if these business houses were to go bust, 70 percent of India’s banking capital will get wiped out. In short, they are too big to fail. So they have no worries really, as the system sustains them.”3

In what follows, I present a precis of the evolution of Indian big business over the last two decades, starting with a fact which is hardly ever foregrounded, namely, that the business families who formed the mainstay of industrial capitalism in the country for a whole three or four decades after Independence have either disintegrated or have been disintegrating and will soon cease to exist as coherent entities, let alone cohesive ones. Next, I shall present the results of an exercise that involves looking at the biggest non-banking companies in the country (both listed and unlisted) in terms of who actually owns them and of the different categories of ownership we can divide them into. Here the chief result is that since the 1960s, when both R. K. Hazari and Mike Kidron wrote fine studies of big business, there have been massive changes in the Indian corporate sector.4 

Dominance no longer lies with the fabled large business houses of the past but with an entirely new breed of capital.

In section three, I shall turn to the cycles that span first a major boom (one of the most rapid periods of growth in Indian manufacturing) in the 2000s and then the slowdown that came to grip most areas of private business for the greater part of the last decade. The slowdown began in 2011 and shows no obvious sign of letting up even today. As the quote from Venu suggests, the banks are central to this sharply fluctuating picture, and their abject prostration before private capital casts doubt on whether any such thing as “finance capital” can even be said to exist in India’s economy. In the final section, I offer an alternative perspective that breaks with the shallow characterization of “crony capitalism” in favor of a deeper reflection on what we are up against….