Welcoming Lakshmi: The Bharatiya Way

The Bharathiya approach to economics has always remained unique since the ancient periods. Based on her long experience and spiritual orientation towards life, the Indian approach towards economics and business has been different from that of the other countries. Though making money was necessary for business, ethical principles and value systems guided all the activities.  Rabindranatha Tagore noted: “Our Laxmi is not the Goddess of the cash balance in the bank, she is the symbol of that ideal plentitude which is never dissociated from goodness and beauty”

Evidences show that India remained the most prosperous region since the earliest periods. Recent studies by Angus Maddison reveals that India was the most powerful economy during the last two millennia, till the British started destroying our native systems. The sages and saints of our country have been emphasizing higher values and the scriptures and texts exhorted people to follow them in their day to day activities, including business.

The noted sage from South India Thiruvalluvar allotted one full chapter entitled ‘means of wealth’ in his book Thirukkural to advise people as to how the higher ideals should guide them while creating wealth. He cautioned people to avoid earning wealth through wrongful methods and underlined that wealth should be earned through ethical means.  Arthashashtra prescribed rules for fair practices in business. Business organisations and associations evolved their own codes of conduct. In the earlier days there was type of business organisation called sreni, similar to the modern-day corporations. They had sreni dharma to guide and regulate their activities.  

The foreign merchants preferred to do business with the Indians for their good character and helpful nature. In the context of western India   it was noted: “The character and conduct of traders in western India generally receive high acclaim from foreign travelers. Al Idrisi tells us that a large number of Muslim merchants visited Nahrwara ( Anahilavada) because the people of the town were ‘ noteworthy for their excellence of their justice, for keeping up their contracts, and for the beauty of their character’, and adds that the people of the region practiced truth and abhorred falsehood. Marco Polo bestows yet more generous praise on the merchants of Lata, …….. He says, ‘you must know that these Abraiaman are the best merchants in the world, and the most truthful, for they would not lie for anything on earth,’……. These observations of the foreign travelers may reflect the general ethos of the mercantile community in western India.”

The businessmen were advised to follow ethical principles not only in earning money, but also in using them. There was a moral compulsion to distribute wealth for good purposes and share it with the less privileged. It is unfortunate that the social and administrative systems that were in place were seriously disturbed by the Britishers during their period of domination.

But in spite of the severe disturbances to our native economic and models, the basic value systems still dominate the economic and business transactions, especially at the non-corporate levels. Studies conducted in different parts of the country reveal that higher features such as goodwill, faith, helping tendency, norms and fair practices remain the basis of business transactions across the country.

In the modern context, business is competitive and hence it is the duty of businessmen to eliminate competition. But the Indian reality is different. In all the business and industrial centres, entrepreneurs take pride in nurturing and developing more and more new entrepreneurs. Successful entrepreneurs encourage their relatives, friends and even employees to become entrepreneurs. In many cases, the employees request their employers to keep their weekly/monthly salaries with them so that after a few years when they promote their units, they would get a lump sum amount. Besides the ex-employees commence their businesses through the first transaction with their erstwhile owners and both of them are proud of it.

This is the situation from Surat in Gujarat to Sivakasi in Tamil Nadu. As a result, entrepreneurship has been growing in India over the years through networks of relationships and the higher idea of helping acquaintances to emerge as businessmen in their lives. This attitude cuts across the narrow caste and other boundaries that define the popular public discourse of the post-independent India. Sankagiri in Tamil Nadu is the largest lorry transport centre in India. A scheduled caste person was working with a majority community lorry owner as a loyal driver. After a few years, the owner bought him a lorry as reward and made him an employer. Besides, there are many persons from diverse backgrounds engaged in businesses as owners without any difficulties. In places like the top knit wear export centre Tirupur, the businessmen come from many states of our country. 

Money is the most difficult commodity to part with. But in India, sharing money for someone promoting and doing business is very common. Studies reveal that the entrepreneurs in the business and industrial centres mobilise a major share of funds through their relatives, friends and acquaintances only.  A study among the Rajkot entrepreneurs showed that many of them mobilised their initial capital through their village connections. Thus villages contribute funds to their boys to become entrepreneurs without much personal expectations. 

World Development Report 2001, published by World Bank notes that the community practice of helping their people in times of need has helped exporters in Tirupur to compete and emerge successfully in the international markets, as they get funds at cheaper costs and not at the market rates as in the case of other countries. London Business School had estimated earlier that India has more than 85 million entrepreneurs, perhaps the largest number in the world. One of the major reasons for this is the higher idea of helping others that prevail in our society.

The value systems find demonstrations at different levels in economic and business activities. There is a company called Habasit Iakoka in Coimbatore, engaged in textile belts manufacturing. It has a unique system of encouraging family values. Apart from its annual family day, it encourages its employees who live with their parents and parents in- laws with higher monthly salaries. For those who live with their parents, a higher salary compared to others are given. For those lady employees who live with their parent-in-laws, a still higher salary is given. 

Business units operated by communities respond and rectify their mistakes when the public point out to them in the larger interests of the society, without bothering about their revenues. There is a cinema theatre in Paalamedu near Madurai in Tamil Nadu, owned by a community. At one point of time, there was a movie in which there were obscene scenes. When the viewers pointed it out, the community immediately removed the movie from the screens and appointed a committee to pre-view movies and approve only decent ones thereafter.

The higher value of helping the ordinary and the underprivileged sections remains the major objective of the corporate sector. In the western world the medical facilities are very costly that it is not possible for many to get treatment easily. But in India there are many hospitals conducting their operations with a service motive even while running their hospitals successfully. Arvind Hospitals is one of the best eye hospitals in the country applauded by the top foreign universities such as Harvard University for its efficiency.  It uses the most modern equipment available in the world and provides services at a very cheap cost compared to the international standards. A cataract surgery in the hospital costs only $ 50 compared to $3000-$ 3500 in the United States. Besides, it provides free services to 60 per cent its patients free of cost and only 40 per cent pay.

There is Narayana Hridyalaya Hospitals promoted by Dr.Devi Shetty from Bengaluru. His hospitals were  estimated to perform about 12 percent of the heart surgeries in India and the largest number of surgeries for children in the world. The average cost of an open-heart surgery was $2000 compared to $20000 to 100000 charged by hospitals in the US. As a result, patients from more than seventy countries are treated for complex heart diseases. It has developed innovative schemes to help the ordinary people. Its micro-health insurance programme called Yeshawini, implemented in association with the Karnataka Government, provides health cover to farmers for a monthly premium of just Rs.10. Its tele-cardiology programmes using ISRO satellite facilities provides advice to thousands of patients free of cost.

Hence even the modern Indian corporate sector has its roots in the traditional Indian values. The corporate system in India is increasingly being recognized and appreciated by the west and the rest of the world in the recent years for its ‘Indian-ness’. A team of professors from the United States under Peter Cappelli of the Wharton Business School interviewed the senior executives of about hundred largest India based companies to find out how they drove their organizations towards  higher performance. While presenting the reason for the superiority of the Indian approach, they note: “The Indian leadership approach arose from the unique circumstances of the Indian economy and society.”

Studies at different levels across the country show that a higher set of values prevail in the Indian economic and business systems even today. In fact, the emergence of Indian economy as a global power during the recent years has been fuelled and facilitated by the value systems prevalent in the society. 

(Organiser, New Delhi, Vol.70, No.20-21, Nov.11&18, 2018)

Economic Practices in Indian Paradigm

The discourse on economics, like the other fields of social sciences, has long been defined and presented through the western paradigms in our country. Even after independence no course correction was possible due to the domination of the Western ideologies on the Indian economists. As a result, we see university text books explaining even today that there are only two economic models namely, capitalism and communism, that are universal and hence applicable to all the countries in the world.  

By now we all know that both the above approaches, that were born in the West during the eighteenth and nineteenth centuries, have failed miserably in their own karma bhoomis (major countries such as USSR and US) during the last three decades. Besides, the multilateral bodies such as the World Bank and almost all the economists accept that there could be  different models for different countries. Moreover, they have also begun to recognize that there could be factors such as culture that could also play a pivotal role in economic activities.

But our educational institutions and much of our elite are so used to depending on others, particularly the West, that we refuse to look at India from our own perspectives. The emergence of India at the global level, even when the West is falling, could not make them look and realise the realities.

Our field studies conducted in different parts of the country during the past twenty five years reveal a clear picture. First of all, we have to remember that India is not just another country. It is an ancient civilization with a very long history and unique characteristics. We cannot understand India through popular text books written during the past few decades. We have to reach out to the ground reality with an objective mind to “learn” and understand.

Our studies reveal that the economic practices in India are unique. They do not fit into the popular western paradigms; rather they are vastly   different. They are rooted in the dust and soil of our nation. The culture and traditions of our land have dominant influence over them. They   defy the state policies, when they are unsuitable, and find their way to success.

India was a poor, under developed and less literate nation during Independence. About 45 per cent of the population was living below poverty line. The literacy rate was around 18 per cent and the average age of life was just above 32 years.  But now after just seven decades, we are the fastest growing economy in the world. All predictions unanimously point out that India is the most potential economy for the future. Earlier London Business School had estimated that we have around 85 million entrepreneurs, perhaps the highest in the world.

How was it possible? We know that for more than three decades since the 1950s, the ruling establishments followed the socialistic approach for   policy making.  As a result, we had to face great difficulties and at one point of time we did not even have the funds to pay for our imports.  Then beginning from the 1990s, the policy makers opted for the market approach with globalization as the core. Again we had to face serious difficulties, especially in the critical sectors such as agriculture and MSMEs.

But in spite of the policy makers adopting the unsuitable western approaches successively over the years, India has progressed. Studies show India has been moving forward continuously over the decades, silently but steadily, following native practices. The contemporary economic history of the world shows us that there is no other country in the world that has made such a U turn in a period of just seven decades - from being the poorest to the fastest growing and the most potential nation in the world.

Studies reveal that Indians, by nature, possess a high economic sense. Hence their regular economic practices are patterned on their original understanding. Let us take for example, savings. Saving is part of life in India. People save, even without realizing that they are saving. Spending more than what is necessary is considered a sin even today in most places and saving takes place at different levels and among different sections.

There was a study among the lady flower vendors in the Coimbatore main flower market, conducted fifteen years back. They did not even have the funds to buy flowers for their business; so they borrowed them from the local financiers and repaid them with high interest by the afternoon. Their daily earnings were in the range of Rs. 250-300. But each of them was saving Rs. 100 or even more. The annual saving of those women came to around Rs. 1,73,000. We generally consider them as very ordinary uneducated women. But their sense of saving is very high.

Savings happen at different levels. In MSME centres one could notice entrepreneurs saving as high as 90 per cent and even more of their earnings. Even at the corporate level, the reserves as a percent of share capital in the Indian companies are more than the corporates of the Western countries.

Entrepreneurship is another major economic practice that has special Indian characteristics. Indians have very high entrepreneurial abilities. Global Entrepreneurship Monitor (GEM) Report 2002 noted that India has the second most entrepreneurially active population in the World, with about 19 per cent of the population engaged in entrepreneurship. In fact, this score was the highest among all the big countries, including   that of China and the US.

The story of entrepreneurship in post-independent India would be revealing. The seeds of many of the bigger industrial and business clusters in our country were sown during the 1950s and the 60s, when Nehru was implementing policies for a “socialistic pattern of society.” Over the years they have become prominent clusters, contributing higher shares to the national economy in their fields of activities. Beginning from the 1950s and even earlier during the colonial periods, our entrepreneurs have started working on their own without waiting for the state to make policies. 

The history of each industrial and business cluster would be interesting with Indian orientation. Local factors and relationships play an important role in all these. The community called Nadars, who are dominant in Southern Tamil Nadu, are a toddy-tapping community by profession since early days. They were from very ordinary backgrounds, with little access to funds. When they wanted to enter into business, they created a native community financial system, called Mahamai, through which each one in the locality contributed a minimum to a common pool. The funds so mobilized would be given to the members for their business activities. 

Now they are the largest business community in south Tamil Nadu. Sivakasi contributes around three fourth of the cracker manufacturing in the country and make more than half of the match boxes. Besides they have one of the best off-set printing centres in India, printing high security items such as cheque books and flight tickets for international customers. Virudhunagar is the major trading centre in the state. Besides, the community has the major share of grocery shops across the state and many such shops in other major cities of our country.  Moreover, the Tamil Nadu Mercantile Bank, which is one of the most successful banks, was promoted by the community decades back.

Community networks and relationships result in higher social capital. Social capital helps in economic and business activities. World Development Report 2001 published by the World Bank notes that the emergence of Tirupur as the top knitwear export centre in the country is due to social capital, through close-knit relationships. It says that the entrepreneurs are able to successfully compete in the international markets through cheaper prices, as their cost of capital is low due to cheap borrowings through community networks.

Community networks make Indian businesses successful at the global level also. The international diamond market in Belgium is dominated by Indians, with Patels and Jains playing a major role through relationships. We all know that Patels dominate the motel industry completely in the US.

The native practices make regions prosperous and vibrant, contributing larger shares to the economy of the state and the country. The western part of Tamil Nadu, known as the Kongu region, is estimated to contribute about 45 per cent to the economy of the state. The dominant community of the region called Gounders from agricultural backgrounds are now into different industrial and business activities such as textiles, transport, engineering and exports. There are many major centres in the region such as Tirupur, Karur, Namakkal, Sangakiri, Thiruchengode and Coimbatore with each of them occupying an important place at the national and international levels.

Families remain the base for economic practices, with family values dominating the economic and business decisions. Women, as mothers, wives, sisters and even grand mothers play a critical role silently. A study conducted among the largest hotel owners in Tamil Nadu showed  that in about 20 per cent of the cases, married sisters helped their brothers in raising initial capital for their ventures.

Faith and trust among entrepreneurs is an important factor that helps them in smooth business activities. A study among the Karur non-corporate finance entities showed that in most of the cases, the financers do not demand documents when they lend funds to the local businessmen.  Unwritten norms and basic values systems govern the business activities to a large extent, especially in the non-corporate centres, making transactions easy.

An important aspect of the Indian paradigm is that people prefer to be self-dependent and do not want to depend on the state. As such they continue with the activities on their own without expecting much.  Studies reveal that most of the development in different economic centres have taken place  without much help from the state. In fact, most of the educational institutions across the country have been promoted by the local societies. Besides, they construct and manage their temples and develop common facilities for themselves.  The responsibility of the state is reduced due to the self-dependent nature  of our societies.

Hence the economic practices in Indian paradigm vary from that of the other countries, especially that of the West. Individualism, consumerism, contract-based relationships and state dependence are the major features of the Western paradigm.

The study of global economic history during the last two thousand years by Angus Maddison shows that the share of India in the global GDP was 32.9 per cent during 0 CE, the highest in the world. India remained the most prosperous country for most of the time during the last two millennia, till the eighteenth century. It only indicates that India must have had her own unique economic systems since the ancient periods. India had to lose  her supremacy and status only due to the large scale interference and destruction of the native systems by the Europeans.   

It is due to the strong foundations and native practices that India is once again emerging as a powerful nation. Studies show that our society has enormous capacity to move forward even through very difficult times, besides ‘Indianising’ outside systems wherever necessary.

(Manthan – Journal of Social and Academic Activism, Year-39, Issue-4, Oct-Dec. 2018,  New Delhi )