Saturday, September 22, 2018

When Bombay overtook Calcutta: A history of India's financial geography

When Bombay overtook Calcutta: A history of India's financial geography

Photo: Wikimedia Commons
Photo: Wikimedia Commons
To the current generation of scholars of finance and economics, this question of when Bombay (now Mumbai) overtook Calcutta (Kolkata) would sound absurd. A competition between Calcutta and Bombay over financial domination? That was a thing?
Calcutta did not just compete but was once a much larger financial centre than Bombay. Older textbooks mention both Calcutta and Bombay as financial centres, with some preferring Calcutta over Bombay.
Charles Kindleberger, in his excellent 1974 essay The Formation of Financial Centers: A Study in Comparative Economic History, shows how major banks concentrate in political and commercial capitals leading to development of financial centres. Calcutta was not just the political but also the commercial capital of British. The trade volumes from Bengal were higher than Bombay for most part of the time period between 1871 and 1939.
Accordingly, when the East India Company decided to establish joint stock banking in their Indian colony, they started in Calcutta in 1806 followed by Bombay nearly 34 years later in 1840 (the one in Madras was found in 1843).
Just like trade data, the Bank of Bengal was also much larger than the Bank of Bombay for much of the history of the Presidency banks. This was mainly due to Bank of Bengal catering to a much larger population compared to Bank of Bombay. On top of this, more regions were accorded to Bank of Bengal compared to the two Presidency banks.
Given the large population, the Bank of Bengal captured larger deposits as well. One indicator of importance in this case is the volume of government deposits, which were much larger in Bengal given it was the political capital as well. The dominance continued till 1913 but Bombay was slowly closing the gap, as we saw in the trade data.
Moving on from banking, we also see larger number of companies being floated in Bengal compared to Bombay. Nearly 45-50% of Indian companies were floated in Bengal compared to Bombay’s share of 13-15%. By 1918, Calcutta and Bombay controlled 43% and 40% respectively of rupee companies and 73% and 19% for sterling companies. This again showing dominance of Calcutta over Bombay, especially in sterling markets mainly due to tea companies.
In per capita comparisons, though, Bombay was better placed than Calcutta. This indicates the relative prosperity of Bombay compared to Calcutta. For instance, the Bank of Bombay collected four times more deposits per person than Calcutta.
Even in terms of companies, we see Bombay having higher paid-up capital.
The next question, then, is when did Bombay eventually accelerate past Calcutta? One gets some cues from clearing house data. The clearing houses were established by Presidency banks and local banks to settle intra-bank payments. This continuous time-series gives more clarity on the evolving trends across clearing houses established in different parts of the country.
In 1913, total clearing house transactions were Rs65,035 lakh with Calcutta settling 51% of these transactions compared to Bombay’s share of 33.7%. Madras had a meagre share of 3.6%. Delhi was insignificant.
However, the gap between Calcutta and Bombay narrowed with each subsequent year. In 1947, the shares became almost equal. In fact, 1947 becomes the inflection point as from that point onwards, Bombay starts to gain over Calcutta. In 1950, Bombay’s share was nearly 6% higher than Calcutta. By 1965, Calcutta’s share had declined to 28% and Bombay was at 35%. The share of Madras is constant at 5-6% since 1947.
The share of Delhi (New Delhi later) becomes larger over time as well, mainly due to large banks such as the Punjab National Bank and Oriental Bank of Commerce that migrated from Pakistan and made their head office in Delhi.
It must be noted that from 1947 onwards, major gains are made in other clearing houses as well. This was due to efforts made to open clearing houses in other smaller centres. It was now no longer just a fight between Calcutta and Bombay. The payment and settlement system also evolved significantly over the years. Earlier, clearing houses were the only players in the game. Now they were one of the players.
Thus, it was around independence that Bombay eventually replaced Calcutta as the leading financial centre. Why did this happen?
Bimal C. Ghose points to several factors in 1943’s A Study of Indian Money Market:
• The world wars weakened the position of Calcutta significantly. In particular, World War II was severe on Calcutta’s economy with the virtual closure of the Calcutta port (RBI History, Volume I). This led to a decline in business in Calcutta affecting local money markets and banking.
• The fate of the Calcutta port made Bombay the colony’s numero uno port. Bombay was always much more naturally suited to being a port compared to Calcutta. After all, Bombay in Portuguese means “good bay”. The Calcutta port was 80 miles up the river from the sea, making it difficult for cargo ships. Bombay was nearer to the Suez Canal and received the bulk of imports from Europe. The shipping rates were also higher in Calcutta. Thus, with maritime trade concentrating in Bombay, the finance sector followed as well.
• Development of railways linked Bombay to not just the Deccan (which was the original purpose) but to Punjab as well. The port of Karachi was closer to Punjab, but Bombay was preferred, given the railway connectivity.
• Indigenous bankers in Bombay offered exceptional facilities and translated their practices into formal banking.
• Bombay was also home to three important markets: stock exchange, cotton and bullion. Calcutta just had jute, which was mainly exported. There was the Calcutta Stock Exchange but the one in Bombay was much older and more significant, perhaps due to its proximity to western financial centres.
Claude Markovits, in his 2011 Premier Industrial Centres Bombay and Calcutta, further adds that the response of entrepreneurs in the two regions to shocks was very different. The ones in Bombay responded to shocks by pivoting to different business opportunities. The same was not the case with Calcutta-based entrepreneurs.
India also saw a large number of banking failures during the period 1915-65, with nearly 1,500 banks closing in the country (based on the writer’s analysis, drawn from various issues of statistical tables related to banks in India). Out of these, 126 banks closed in Bombay whereas nearly 360 banks closed in Bengal. The closure was severe in Bengal from 1947 onwards (after becoming West Bengal), with 168 closing in the period 1947-65 whereas just 13 closed in the Bombay region in the same period.
The large-scale failures in Bengal were partly due to Partition and partly due to poor management of these banks. This wide gap in failures of banks undoubtedly helped strengthen the case of Bombay as the financial centre.
Another factor is the choice of location of India’s central bank. The location of the central bank is an important factor, as suggested by Kindleberger. John Maynard Keynes and Sir E. Cable made a memo on establishing a central bank in India in 1914. The two cities put forth as potential sites to headquarter the bank were Calcutta and, believe it or not, Delhi. Bombay was not even considered. Delhi was preferred then as it was considered independent of the three Presidency bank offices!
However, by the time of the RBI’s formation in 1935, the contest was between Calcutta and Bombay. The former represented the past and the latter was the future. Thus it was decided to make both cities joint headquarters for India’s central bank. Indeed, the first board meeting was held In Calcutta:
Calcutta and Bombay being the most important commercial and financial centres in the country, it became the practice of the Governors to divide their time approximately equally between these two places (apart from brief visits to other centres) in conformity with the spirit of these recommendations. The Bank also acquired residential accommodation for the Governor in the two cities.
However, the then-governor James Taylor made a request to shift the head office to Bombay in 1937:
The experience of the last two years has shown that the present practice of migrating from one centre to another throws an impossible burden on the administration of the bank and involves great waste of time and duplication of work. 
His request was acceded and in December 1937, the central office was permanently transferred to Bombay. However, the governor continued to shuttle between Calcutta and Bombay. In 1949, on then-governor B. Rama Rau’s request, Calcutta House was sold off, making Bombay the sole location of the Indian central bank.
This decision was obviously due to Bombay emerging as a major financial centre. But the shift of the central bank further reinforced the trend and led to more financial activity shifting to Bombay. This is also reflected in the clearing house trends and banking failures shown above.
Overall, this history of financial geography is quite illuminating as it tells you a lot about how several forces shape (and break) financial centres. In India’s case, this is even more so, given the interplay and politics between colonial and domestic interests. The author will be happy to engage with interested readers on this subject.
Bimal C. Ghose (1943), A Study of Indian Money Market, Baptist Mission Press, Calcutta
Charles P. Kindleberger (1974), "The Formation of Financial Centers: A Study in Comparative Economic History", Princeton Studies in International Finance No.36
Claude Markovits (2011), "Premier Industrial Centres Bombay and Calcutta" in The Oxford Anthology of Indian Business, edited by Medha Kudaisya, Oxford University Press, Delhi
RBI (1970), History of Reserve Bank of India (1935-51) Vol. 1, Times of India Press, Bombay
Amol Agrawal is a PhD student at IIM Bangalore working on Indian banking history. He writes a blog called Mostly Economics.
Comments are welcome at

Tuesday, September 11, 2018

Versova-Bandra Sea Link--2018 PLAN


Reliance Infra-led venture to build Versova-Bandra Sea Link

Reliance Infra-led venture to build Versova-Bandra Sea Link

17.17-km bridge to cost nearly Rs. 7,000 crore, be ready by 2023

The consortium of Reliance Infrastructure and Astaldi S.p.A of Italy have successfully bid to construct the 17.17-km Versova-Bandra Sea Link (VBSL) for Rs. 6,993.99 crore, beating those made by L&T-Samsung JV and Hyundai Development Company-ITD JV. The tender was floated by Maharashtra State Road Development Corporation (MSRDC).
The bid amount is higher than estimate of Rs. 6,426 crore made by Louis Berger, who were appointed in January as consultants. “The proposed cost was increased to a little over Rs. 7,000 crore due to a steep rise in steel prices, and the interest to be paid on the mobilisation of the advance amount (5%, or Rs. 350 crore),” a senior MSRDC official said.

The VBSL is thrice as long as the 5.6-km Bandra-Worli Sea Link, and will run from Bandra Reclamation to Nana-Nani Park in Versova. It will connect to Carter Road and Juhu Koliwada. Close to 40,740 vehicles are expected to use the VBSL in 2023, mostly cars, and commuters may have to pay Rs. 250 for the entire stretch. Officials said construction will start after the monsoon, and is expected to be completed by 2023. Toll will be charged till 2052, according to initial projections.
The MSRDC will be providing around five hectares in Juhu Koliwada for a casting yard. The official said clearances for the land should come in a few months, and Reliance Infrastructure is also looking for more sites along the coast. “We will give them the option to take the land. It is up to them to decide whether they want to take it or not.”
The VBSL is part of the Coastal Road project. The BMC is executing the south end of the project, which will connect Princess Street, Marine Lines to the Bandra Worli Sea Link.
BMC had made a provision of Rs. 1,500 crore in its current budget, and the tendering process is on.


Bandra-Versova Sea Link



Image result for coastal road map versova

Reliance Infrastructure-Astaldi wins bid for Versova-Bandra sealink

Free Press Journal
just now
Mumbai: The Reliance Infrastructure and Italian firm Astaldi’s joint venture has won the bid for Versova-Bandra Sealink. Reliance Infra has already been awarded the bid for 32.32-km-long Wadala-Ghatkopar-Thane-Kasarvadavali Metro.
This sea-link project, worth about Rs 7,500 crore, is expected to be completed within five years. In 2016, this same project was worth Rs 5,500 core. “It has been assured to us that the project will be completed in four years. RInfra and Astaldi combine has won the bid but it will take a month before the Maharashtra State Road Development Corporation board endorses it,” said an MSRDC official.
In December 2017, the Anil Ambani-led Reliance Infrastructure had replaced its Chinese partner for the sea-link project. Reliance was one of the five companies that had bid for the sea-link work. Like Reliance, other Indian companies had gone for a JV, too. This project was first proposed in 2009, but after the idea of coastal road was floated, it was abandoned. Now, this project has gained momentum, since there is a delay in the coastal road project due to opposition from environmentalists and Juhu residents. Since then, the cost of the project has gone up substantially.

Image result for coastal road map versova

Page 217 Mumbai Infrastructure Projects, Airport, Metro, Monorail ...
Indian Real Estate Forum
Work on Versova sea link to start next month.

Image result for coastal road map versova

UIDAI’s Aadhaar Software Hacked, ID Database Compromised, Experts Confirm

Skilled hackers disabled security features of Aadhaar enrolment software, circulated hack on Whatsapp.

Sunday, September 2, 2018


Top stories

An ecosystem of fear?
Times of India · 1 hour ago

An ecosystem of fear? - Times of India Blogs › Blogs › India Blogs
2 hours ago - The arrest of several rights activists across the country on charges of having Maoist links has created deep disquiet among many commentators ...

An ecosystem of fear?

September 3, 2018, 7:00 am IST in City City Bang Bang | India | TOI
The arrest of several rights activists across the country on charges of having Maoist links has created deep disquiet among many commentators. Accompanied as it is, by a new label- ‘Urban Naxals’, it is being seen as a sign that this government is determined to act against all signs of dissent and build a narrative of the country being under threat from organised internal forces.
And yet, there are those that argue that nothing dramatically new is happening. The law under which the action has been taken was strengthened by the UPA government, and some like Varavara Rao, Vernon Gonsalves and Arun Ferreira have been imprisoned even under previous regimes. Also, the fact that so many commentators have been able to criticise the government in the harshest possible terms is being pointed to as a sign that the freedom of expression is alive and well.
While it is true that previous governments also have a poor track record when it comes to dealing with dissent, there is no question that there is a difference today. That there is a clear attempt to create an atmosphere of fear, is possible to discern when one examines all the actions taken by the government. The production of fear at scale is being achieved not only through harsh punitive measures, but through a complex and elaborate network of actions, real and symbolic.
The case of media is illustrative. Media, for instance, has been subject to pressure and arm-twisting before. The raid on NDTV apart, most other actions deemed coercive, including the removal of key voices critical of the government, have been taken by the owners of media platforms and not by the state directly. One can infer that the state was indirectly responsible for the same, but the question is, why should media owners, hardly unused to facing political pressure give in this time around? There is no special leverage that this government has that previous regimes didn’t. But the clear feeling among media circles is that this time around, the sense of threat is more palpable. This government is deemed capable of much more than what it has actually done; the fear is evoked by latent violence in the body language of the government rather than in its actions alone. ‘Violence in the air’ is a more effective way of fostering self-censorship than any direct method.
But there is another variable at work. In the case of media, the problem does not stem only from fear, but also from greed. The taming of media is largely a voluntary phenomenon, guided by a desire to cater to one’s commercial self-interest by deferring to the needs of the market. When one outlet of the same media house can take an ideological line completely at odds with another, it is clear that fear alone is not at work. Market segmentation is. The state uses both levers, fear and greed to get most of media in line.
And then there is social media where keyboard warriors create a new vocabulary of fear with predictable regularity. Individuals are targeted, new labels are created, lists are generated and campaigns are launched to build a narrative of fear. The reward for these non-official soldiers is a dizzying rise from obscurity and in some cases, the promise of official recognition and rewards. Even bureaucrats and serving officers have an incentive to speak and act on behalf of the government. The differential treatment meted out to those that amplify the government’s line and those that don’t is stark.
The orchestration of fear is carried out with finesse. Fear reproduces itself thanks to the elegant design of the ecosystem of intimidation that is in place today. The more commentators connect the dots and discern larger intent from everyday actions, the more actively they participate in the production of fear. Showing signs of fear itself becomes proof- unless you are an anti-national, why should you be afraid?
The calibrated use of reward and punishment, the taking of action against victims rather than perpetrators, the penetration of virtually every institution that matters, the creation of voluntary and vocal cheerleaders for the actions of the state, the regular encouragement given from the highest level of the government to those that carry out intimidation, the periodic acts of brutal violence that indicate that the threats are not only symbolic in nature, the breeding of several kinds of private armies that publicly display their muscle, the succession of violently intemperate statements made by minor party leaders, and actions like the arrest of activists on charges that that align with the larger narrative that is being built- these are all part of this ecosystem of fear.
The electoral advantages of such a strategy are unclear. The fear of ‘Urban Naxals’ is unlikely to galvanise a significant number of voters, for it is difficult to correlate this with any observed experiences in our everyday lives. The argument that the nation is under threat from such forces, is one that might have great resonance with a small group of diehard supporters, but is unlikely to connect with a wider audience. The conspiracy outlined is far-fetched even by the standards of contemporary political discourse. From the perspective of voters, the ‘enemies’ identified have neither currency nor deep emotional resonance. As a political gambit, it is weak given that it leaves out most key opposition parties from this line of attack. The production of fear might have been carried out very effectively, but it looks unlikely to deliver great electoral effect.
Those that believe that things will change if the BJP is defeated might be deluding themselves. It does not matter who is in power; what matters is who sets the agenda. The power of a negative agenda is that even when one counters it, only more negativity is produced. The fear that has got manufactured does not come with an expiry date. That might well be the abiding legacy left by this government.

DISCLAIMER : Views expressed above are the author's own.