This is a book spanning a period of 50 years, from 1927 when the Federation of Indian Chambers of Commerce and Industry was established to the eve of 1977, which is the Golden Jubilee year of the organization. As the author points out, it does not purport to be a definitive history of the institution. Nor can it be said to be a definitive history of the economic developments in the country during the period. And yet, it weaves together a coherent account of important and significant economic changes as relate to private enterprise, and the interplay of relations as between the organized business community and the Government. The write-up on the cover says that the book is essentially a contribution to business history, which is an area of study not yet fully explored in India. The book throws light on the working of an organization which, in the final analysis and without questioning its legitimacy, is a special interest group—a field of sociology, which too calls for fuller exploration. A librarian would have some difficulty in classifying this book—a quandary reflected in the choice of the title. The main title Enterprise and Economic Change is suggestive of something more than what the book is about. On the other hand, the book is something more than a chronicle conveyed by the subtitle, 50 years of FICCI.
In the history of the Federation, as in other fields, Independence marks a watershed. Prior to Independence, there was a historical identity of interests as between the Indian business community and the Indian National Congress, as both realized that there can be no worthwhile economic development without political freedom. On many issues of economic concern at the time, such as the rupee-sterling ratio, tariff- protection of indigenous industry, the Round Table Conference, and sterling balances, they spoke with one voice, and the relations between the leaders in the business community and the Congress were fairly harmonious. Indeed, during periods when the national leaders were in prison or out of office, the Federation sought to speak for the nation as a whole. The only point, perhaps, of some difference was in regard to the attitude towards enterprises already established in India of British origin, about which Indian businessmen were somewhat sensitive, whereas the general approach of the Congress was one of nondiscrimination. In the early ideas and efforts towards planning and planned industrialization, as represented by the work of the National Planning Committee constituted by the Congress with Nehru as Chairman, and the Bombay Plan, itself formulated by a group of businessmen, the Federation took some interest, but not particularly actively or enthusiastically, being more preoccupied with concrete issues of the immediate future. The first four chapters of the book deal with these events covering the first twenty years of the history of the Federation.
After Independence, the relations between the business community and the Government became progressively more ambivalent, and have remained throughout a kind of love-hate relationship. First, there was a period of euphoria. There was the expectation that the millennium had arrived, and those now in power were familiar figures thought to be sympathetic to the kind of industrial expansion, as businessmen saw it. Jawaharlal Nehru first addressed the annual session of the Federation in March 1947 and had continued to do so regularly. Successive Finance Ministers of independent India, starting from Shanmukham Chetty, were all persons who could be expected to show an understanding of the problems of industry and trade. Nevertheless, it was not long before disillusion set in, and political compulsion as well as the inexorable logic of industrialization of an underdeveloped country thrust India on the path which she has taken since then. There were then a series of skirmishes between the Federation and the Government on major issues of economic policy, such as the Industries Act, the nationalization of life insurance, state trading, the controversy about public versus private sectors and the approach to planning, on almost all of which, let us admit, the Federation lost, but not without grace. On both sides, there was an element of shadow boxing, and on both sides, there were two faces—one public and one private. Ultimately, that the Federation has worked towards a modus vivendi, responding in its own way to the changes in the economic situation and environment, and continues today as the authentic voice of private enterprise, speaks as much for the realism and adaptability of Indian businessmen as for the durability of the Indian system. In the process, the Federation itself has undergone profound changes, with a new generation of leadership and altered style of functioning.
Unlike in matters of domestic economic policy, the relationship between the Federation and the Government in the field of foreign trade and foreign economic relations has always been close and cooperative. Here, as before Independence, the interests of the Indian business community and the country as a whole were the same. In the discussions in GATT, in trade delegations to various countries, in the Joint Business Councils with Japan and USA, and in the promotion of joint ventures abroad, the Federation and the Government have worked with mutual confidence and rapport.
On matters of taxation, the representations of the Federation and the annual dialogues with the Government were largely a matter of ritual because, as observed by the author, the Indian fiscal system under a regime of planning, on the whole, bypassed the Federation.
There is one area in which the persistent efforts of the Federation and the business community eventually registered significant success, which, however, is not adequately highlighted in this book. What has been described as a Byzantine system of controls and licensing, administrative procedures and decision-making processes, as it had grown over the years, has been the theme of tales of woe by businessmen operating in the country, both Indian and foreign. The book quotes a letter from Bharat Ram to Prime Minister Nehru, written in May 1963, saying, ‘underlying, and in a way overriding, all these issues is a general sense of frustration in the public mind caused primarily by the delays in governmental administration … we have got to consider whether the administrative machinery is not too much interlaced with avoidable complex procedures, and what can be done to simplify and streamline them.’ The Prime Minister replied that everyone was deeply concerned about these matters and that the Planning Commission and the various ministries were anxiously considering them. This consideration has taken long to grind its way, but the progressive dismantling of outdated controls in recent years, the liberalization of industrial and import licensing, and the simplification of procedures are now sufficiently well known and acknowledged.
This shift and the nuances in the attitude of Indian businessmen towards foreign investment in India are of intriguing interest. Prior to and immediately after Independence, foreign enterprise in India was seen as a competitive threat to Indian industry. The initial reaction of the Federation to Government’s policy statement in 1949, welcoming foreign investment selectively on grounds of augmenting domestic savings and inducting modern technology, was one of dismay. Soon, however, Indian businessmen decided to join the bandwagon and, as pointed out by the author, have since then never looked back. This perhaps needs to be qualified to some extent. It is not as if businessmen as a group always had a common attitude to this question. On many occasions, there has been as much opposition to foreign investment and collaboration from within the business community as from other quarters, with the haves and have-nots ranged on different sides.
A question that has always nagged private business, especially big business, in India as elsewhere, has been its public image and its place in society. This came up sharply after the report of the Vivian Bose Commission in 1963 and gave rise to a fissure within the Federation. Moves by some businessmen to influence public opinion, such as the Forum of Free Enterprise, and the excursion into politics during the 1967 general elections proved either counterproductive or disastrous. From time to time, the Federation adopted resolutions exhorting high standards of business conduct and subservience to wider public interests and social obligations. There has been some talk about business taking a more direct role in specific areas, such as the development of backward areas and an effective distribution system. Faulty distribution, in particular, accounts not a little for the poor image of industry and this, as pointed out in the book, has not received as much attention from the Federation as production. The image problem is one the Federation has still to live with and one can only hope that it is able to find an acceptable identity by the time its Diamond Jubilee comes round.
The remarkable thing about this book is the sustained interest that is maintained over some 170 pages, considering the nature of the subject. There is much information, hitherto unpublished, culled from the records of the Federation. The historical material is organized with admirable selectivity and imagination. In writing this book, Shri Venkatasubbiah has brought together the skills of a journalist to thread together connected events, with a sense of the dramatic; the critical skills of an economic analyst; and the literary skills of an author of considerable merit. Throughout he has handled the subject with a light touch and resisted the temptation to solemnity, tended to be adopted by writers of a book of this genre.
R.V. Raman was formerly Secretary in the Department of Industrial Development, Government of India.