The Politics of Industry in Nehru's India

The paper argues that at the time of independence Indian managing agencies, controlling most industrial firms and their associated enterprises, were in themselves embodiments of pre-industrial forms of capital accumulated through trading and moneylending. This militated against technological dynamism within the industrial firms because the managing agencies applied a profit-maximising calculus across their various business activities, rather than in relationship to any individual firm. The group structure, in fact, facilitated the leakage of surpluses generated in industrial activity into the parallel speculative and moneylending interests of the managing agents. After independence, the government's attempts to reform the industrial sector met resistance from politically influential businessmen who had supported the anti-colonial movement. The British government also interceded here. The social engineering that these reforms entailed, embodied in legislation, was thwarted by the combined pressures exerted by affected businessmen, but this should not prevent an appreciation of what the government was attempting.