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INDIAN BUSINESS HISTORY

Session 1

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SOME KNOWN FACTS

GDP

Major Sectors

Economics

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Gross Domestic Product 2014

Ranking

(millionsof

Economy

USdollars)

USA

United States

CHN

China

JPN

Japan

DEU

Germany

GBR

United Kingdom

FRA

France

BRA

Brazil

ITA

Italy

IND

India
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174,19,000
103,54,832
46,01,461
38,68,291
29,88,893
28,29,192
23,46,076
21,41,161
20,48,517

PURPOSE

Study of economics reveals the ways in which choices are made

what resources are used, and who gets what in the bargain.
By understanding economic theory, and by familiarising
themselves with the economic history of the country, business
managers can make more sense of the environment around them,
and thereby make better business decisions.
A failure to appreciate the causes and effects of fluctuations in
the economy will deprive business managers of the chance to
obtain a clear perspective of what is happening in their markets,
now or in the near future.

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How the elephant earned its

stripes

Once there was an elephant called India who was rich,

wise, and powerful and traded with countries in other
continents and gave the world many new innovations.
Somewhere along the line, however, India and the East
Asian countries seem to have lost out in the game and
fallen from grace, which led to the rise of Great Britain,
Europe, and the U.S.
The Indian peninsula is separated from mainland Asia by
the Himalayas in the north, the Bay of Bengal in the east,
the Arabian Sea in the west and the Indian Ocean in the
south.
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THE THIRD WAVE

Transition of human history that had advanced to

present era on the pattern of Three Waves.
The First Wave economy was of agrarian nature
The people transitioned from nomadic wandering
and survived until 1650-1750
The Second Wave commenced in 18th century,
describes an industrial society, commencing in 18th
century, where machine expressed its muscles to
begin Industrial Revolution and urbanization around
factories
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Mass production led to the birth of new form of economy and adoption
of new managerial concepts like:
standardization, specialization,
centralization, synchronization, economies of scale and corporations.

The Third Wave is called as information or the knowledge age.

The agricultural revolution took thousands of years to play it out,
while

the rise of industrial revolution took a mere three hundred years.

Today
history is even more accelerative, and it is likely that the Third Wave
will
sweep across history and complete itself in a few decades.
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THE FIRST WAVE

The land was the basis of economy, life, culture, family structure, and
politics. The economy was decentralized and life was organized
around the village. The simple division of labour prevailed defining a
few castes and classes: nobility, priesthood The land was the basis of
economy, life, culture, family structure, and politics. The economy was
decentralized and life was organized around the village. The simple
division of labour prevailed defining a few castes and classes: nobility,
priesthood warriors, helots, slaves or serfs. In all of them, power was
rigidly authoritarian. In all of them, birth determined one's position in
life.

New types of conflicts arose among the farmers; who owned which
land? Who got to use the available water? The community developed
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laws and designated people to enforce them. How did they pay for the
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laws, the protection,
or the land? Generally, they taxed what was

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Sources of Power & Energy: First Wave civilization drew their energy
from renewable living batteries like: human and animal muscle-power
or from sun, wind, and water. Forests were cut for cooking and heating.
Animals pulled the plough. As late as the French Revolution, it has
been estimated, Europe drew energy from an estimated 14 million
horses and 24 million oxen.
Commerce & Trade: In First Wave societies, goods were normally made
by handcraft methods. Products were created one at a time on a
custom basis. The same was largely true of distribution. It is true that
merchants in the widening cracks of the old had built up large
sophisticated trading companies feudal order in the West. These
companies opened trade routes around the world, organized convoys of
ships and camel caravans. They sold glass, paper, silk, nutmeg, tea,
wine and wool, indigo.
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THE SECOND WAVE

And all Second Wave societies that built towering technological and
economic structures on the assumption that cheap fossil fuels would be
endlessly available. A shift to non renewable energy sources: coal, gas,
and oil made mass production possible. Mass production required giant
pools of capital. To encourage investors, the concept of limited liability
was introduced and the corporation was created.
Rise of Imperialism.
At the end of the Second World War, by contrast, the United States
stood
as a chief creditor nation in the world, filled the power vacuum and
stepped up to gain economic control of much of the world by the
creation of three institutions.
1. International Monetary Fund (IMF)--compelled its member nations to
peg their currency to the American dollar or to gold (most of which
was held by the U.S.)
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THE SECOND WAVE

2.The World Bank--provided funds to rebuild after the war,

and also to build further infrastructure in third-world
countries for the more efficient movement of raw materials
and agriculture export to the Second Wave nations.
3.General Agreement on Tariffs and Trade (GATT)
liberalized trade, making it difficult for the poorer, less
technologically countries, to protect their tiny fledgling
industries.

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THE THIRD WAVE

Information Technology
Bio technology
The new social memory
The rise of the Service Sector

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1700-1750: PROBLEMS

The British EIC had Bombay, Calcutta and Madras and

at first the British did not want more land.
But then war broke out between rival Indian princes,
and the French interfere making the Indians trade
with France (and not Britain).
The EIC would be forced out of India, unless something
changed

ROBERT CLIVE CONQUERS INDIA

Robert Clive worked in an office for the

EIC but he was getting bored
The EICs force of armed guards was
growing into an army; Clive joined them
as an officer
In 1751 Clive led 500 men against 10,000
French and Indian soldiers and won!

Clive led the EICs army to victory many more times, forcing the
French out and making the East India Company very powerful
it wasnt the British government taking over India it was a
British business!

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The British East India Company whose political power

gradually expanded in India from 1757 onwards, used huge
revenue generated by the provinces under its rule for
purchasing Indian raw materials, spices and goods. Thus
the continuous inflow of bullion that used to come into
India on account of foreign trade stopped altogether. The
Colonial government used land revenue for waging wars in
India and Europe leaving little for development of India. In
short span of 80 years (1780-1860 AD) under Colonial rule,
India changed from being an exporter of processed goods
for which it received payment in bullion, to being an
exporter of raw materials and a buyer of manufactured
goods. More specifically, in the 1750s, mostly fine cotton
and silk was exported from India to markets in Europe,
Asia, and Africa; by 1850s raw materials, which chiefly
consisted of raw cotton, opium,
and indigo, accounted for
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most of India's exports.
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The ruthless exploitation under British colonial rule

completely devastated Indias economy. Indias population
was subject to frequent famines, had one of the world's
lowest
life
expectancies,
suffered
from
pervasive
malnutrition and was largely illiterate. As per British
economist, Angus Maddison India's share of the world
income went from 27% in 1700 AD (compared to Europe's
share of 23%) to 3% in 1950.

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