How the Marwaris came to acquire enormous wealth and business dominance
MV Subbiah, the patriarch of the Murugappa group, once pointed out to me that India has had great trading communities through the ages, such as Sindhis, Kutchchis, Chettiars and Marwaris, but none of them came to dominate the Indian business and economy in the post-independence era as the Marwaris did. The reason for this, according to Mr Subbiah, was that many Kutchchis went away to Africa and Chettiars went to the East (from Burma to Malaysia) and Sindhis went all over the world in search of better prospects. For some reason, Marwaris stayed in India. So, they were ready to pick up the businesses left behind by the British—from newspapers to tea gardens to jute and cotton mills—and then work through the increasingly bureaucratic system, to expand their empires.
This is probably why, at one time, practically all the top Indian companies were controlled by Marwaris, leaving a smattering in the hands of Parsis and Punjabis. Between them, the Birlas, Goenkas, Modis and Singhanias, owned virtually all the major companies listed in the stock market. The past two decades, though, have been tough for the biggest Marwari business houses, to maintain their pre-eminence. The Modis and Singhanias have messed up some of the businesses. More importantly, Marwaris have failed to capitalise on the new opportunities in telecom, software and pharmaceuticals.
This book is part of a series edited by Gurcharan Das about Indian businesses. The previous ones were on Arthashastra, East India Company, Money in Ancient India, etc. This is the sixth in the series. The author, Thomas A Timberg, did his doctoral dissertation at Harvard on the Marwaris and claims to have continued to follow the affairs of the members of this community.
Timberg takes us through the early history of Marwari traders, from the Mughals right up to the British period, and their ascendancy as partners to the British business houses such as Burmah Oil. Initially, their job was to act as a bridge to the Indian market, but later they acted as ‘guaranteed brokers’, so called because they ‘guaranteed the soundness of various under-brokers’. “Sir Badridas Goenka mentioned that under-brokers would visit his broker Sir Hari Ram Goenka at his suburban garden home on Saturdays to secure their allocation of imported cloth. Sir Hari Ram was the sole broker to Rallis Brothers,” writes Timberg. Interestingly, an exhaustive list of such brokers (called banian) of 1863 shows that all, but one, were Bengalis. Later, khatris, another strong trading community from Punjab, displaced some of the Bengalis; but, eventually, all banians were Marwaris.
While continuing as banians
they also started speculating on Indian stocks and commodities and, finally, emerging as industrialists. This has been the trajectory of almost all leading Marwari houses. Speculative trading involved government notes, shares, wheat, Rangoon rice, opium, gunny-bags, gold and silver. Timberg writes that he has seen “entries in Marwari ledgers, as early as 1791, entering speculative transactions or fatka
.” These were bets on the arrival date of the monsoon.
How did the Marwaris succeed in controlling such large swathes of businesses? Money begets money. Thanks to the first two phases (partners to the British and speculation), they were already rich. So, when the opportunity to enter industry arose, they, like the Parsis in Bombay, were ready with accumulated capital. What also helped was the fact that GD Birla and Jamnalal Bajaj were early and major donors to and fund-raisers for the Indian National Congress Party.
Unfortunately, while Timberg gives a detailed account of the Marwaris until the pre-independence period, he largely skips the business story of the post-independence period and jumps into discussing topics such as ‘Marwaris and Social Change’ and ‘The Marwaris and Literature’. The second half of this small 155-page (main text) book is a damp squib.