Economic history: India

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Additional information may please be sent as messages to the Facebook
community, All information used will be gratefully
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A.D. 1 to 2003

SWAMINATHAN S ANKLESARIA AIYAR/ India’s golden period is now, not in some distant past/ The Times of India/ 6 August 2023


The pioneering work of Swiss economic historian Paul Bairoch showed that in the ancient past, India had the highest share of world GDP, which was reduced to a humiliating fraction by the time India gained independence. The OECD asked eminent historian Angus Maddison to research the matter further.

In his magnum opus, ‘Contours of the World Economy 1–2030 AD: Essays in Macro Economic History’, Maddison estimated that in

1 AD, during the Hindu period, India accounted for 32% of world GDP, the highest share of any region.

During the Muslim period, India’s share gradually declined from 28.1% in 1000 AD to 24.4% in 1700.

It crashed in the subsequent period of British rule to just 4.2% by 1950.

India represented 33.2% of the world’s population in the year 1 AD. This was slightly more than its GDP share of 32%. So, Indian GDP was slightly below the world average. Italy was almost twice as rich under the Roman empire. India’s high GDP share reflected not prosperity, but high population.

Maddison estimates that India’s GDP stagnated at $33.75 billion from 1AD to 1000 AD, the Hindu-ruled period. Per capita income also stagnated at $450 as the population remained steady at around 75 million.

Why did the population not increase for a thousand years? Because drought, disease, and wars meant that merely staying alive was a challenge. Conditions were as bad in the rest of the world. In sum, the period from 1 to 1000 AD was one of poverty, economic stagnation, and high mortality.

Under Muslim rule, roughly between 1000 and 1700, India’s annual GDP almost tripled to $90.7 billion. Mortality fell substantially, enabling the population to soar from 75 million to 165 million. Population growth substantially offset GDP growth, so per capita income grew by barely a quarter, from $450 to $550. Still, there was an improvement, and a longer-lived one.

These trends intensified in the British period. Between 1700 and 1950, India’s GDP rose to $222.22 billion and its population to 359 million. However per capita income rose only marginally to $619.

British colonial claims of having uplifted a backward India were vastly exaggerated. However, India did not get poorer in per capita income terms in the British era. India’s share of world GDP plummeted mainly because incomes in the West soared after the industrial revolution.

Economic growth finally took off in India after it became independent.

After almost 2,000 years of negligible growth, per capita income soared to $2,140 by 2003. Mortality fell sharply, so the population rose to 1.05 billion by 2003 despite the spread of contraception.


Chandrima Banerjee, Aug 22, 2023: The Times of India

Level of urbanisation in Mughal India and Europe, 1500- 1850
From: Chandrima Banerjee, Aug 22, 2023: The Times of India
Crop revenue rate, city-wise- Mughal India
From: Chandrima Banerjee, Aug 22, 2023: The Times of India
Revenue during Mughal times, 1600- 1850
From: Chandrima Banerjee, Aug 22, 2023: The Times of India
Purchasing power of wages in terms of food, crop-wise-1
From: Chandrima Banerjee, Aug 22, 2023: The Times of India
Purchasing power of wages in terms of food, crop-wise- 2
From: Chandrima Banerjee, Aug 22, 2023: The Times of India
Purchasing power of wages in terms of food, crop-wise- 3
From: Chandrima Banerjee, Aug 22, 2023: The Times of India
State revenue collection, between the time between Akbar and Aurangzeb
From: Chandrima Banerjee, Aug 22, 2023: The Times of India
Areas affected by famines, 1595- 1648: 1
From: Chandrima Banerjee, Aug 22, 2023: The Times of India
Areas affected by famines, 1650- 1734- 2
From: Chandrima Banerjee, Aug 22, 2023: The Times of India
Areas affected by famines, 1737- 1792- 3
From: Chandrima Banerjee, Aug 22, 2023: The Times of India
Textiles and crafts in Mughal Indian cities
From: Chandrima Banerjee, Aug 22, 2023: The Times of India

But what was it really like for a citizen in the empire of the last significant Mughal ruler — economy, jobs, wages? Was it any worse or better than the times under those who came before him and after him? Before Aurangzeb: Manufacturing had really taken off under the MughalsBecause the primary source of revenue for the administration was land, taxes were in the range of 1/3 to half of the crop — either in cash as a value of the crop or a share of the actual produce. The cost of collection was also extracted from the people, and then local zamindars added their own taxes. It was exploitative, much like the other great medieval kingdom of the time — the Vijayanagar empire — where cultivators gave 1/6 of their produce to the state, 1/20 to temple Brahmins and 1/30 to the temple. But unlike land tax, which is fixed without taking into account if the land yielded anything, the Mughal empire’s tax was one entirely on the output. So, if it didn’t rain enough or pests destroyed a crop, the tax would go down. If there was a bumper crop and prices went down, taxes were adjusted. And if a farm was repairing wells or building canals, concessions were made.(Bengal, however, was an exception and had fixed land revenue the way we understand it now — same rates irrespective of what you do with the land.)When Akbar took over, these taxes were rationalised on the basis of where the crop was or what local prices were like. Once a year, a tax assessor would measure how much land was being cultivated, come up with a rough estimate of expected yield and then tell the farmer how much tax they might have to pay. In case a crop failed, up to 12.5% of the land could be declared cropless and that land was not counted for tax assessment.There is, however, always a significant distance between what goes on paper and what actually goes down. In this case, the Mughal empire had a network of jagirdars (in a broad sense, revenue collectors) who were paid according to their rank — with temporary land allotments proportionate to their pay grade. Officially, they were just claimants to a share of the tax and had no legal jurisdiction over the assigned region. But with time, the jagirs were concentrated in the hands of an increasingly smaller number of nobles. By 1646, when Shah Jahan was on the throne, some 73 princes and nobles controlled about 38% of the empire’s revenue. It was a lot of power.The only protection farmers had was that zamindars were not allowed to take their farmland and hand it to hired labour for the work. But another major transformation had taken place by the time the Mughal reign began in 1526. In the manufacturing space. The laborious process of making things used to be largely driven by slave workers — from the Chalukyas to the Delhi Sultanate, documents show that slave trade was quite common and slaves were engaged in all kinds of work.When Babur got here, he was impressed with the abundance of skilled workers. But slave labour, it appears, was gone. Why? Because those running businesses realised that paying someone for work done was cheaper than covering all of a slave’s needs. Also, an expanding empire under the Mughals meant an expanding market. Artisans who wanted to reach this larger market had to start relying on merchants who would put their products on the trade grid within the empire — areas the artisans had never accessed before.Uncharitable though the two processes were, turning labour into a commodity and pushing artisans into a position of dependence, they ended up creating a sort of pre-industrialisation economy. And areas where productive farms and bustling commodity markets intersected became commercial nodal points of the empire — for both domestic and foreign trade. India had a massive trade surplus with Europe at this point.The currency for these transactions was in the form of gold, silver and copper coins — a system Sher Shah initiated and Akbar improved — with standardised weights. These were issued from royal mints across the empire. The metals, however, came from other countries and till at least 1650, the number of coins in circulation was dependent on imported valuable metals from what is now America and Japan. All European trade with India relied on this arrangement. The port of Mocha (which lent its name to the coffee) in Yemen was called the “treasure chest of the Mughal” because of the volume of silver it traded with India.All of this, in turn, affected prices. Between 1592 and 1639, for instance, silver currency in circulation increased about three times. Within roughly the same period, prices of everyday commodities rose 1.5 to 2 times. But wages may not have been too bad.During Akbar’s reign, for instance, the price of foodgrains was between 6 and 12 copper coins for a mann (25 kg). An ox-driven cart driver could make a maximum of 12 copper coins a day. Suppose the driver had a family of six and they had 200g of rice each, twice a day. It would come to 2.4 kg a day. To put it simply, one day’s wages could cover 10 days’ rice at the highest price for six people. This, while not including the annual allowance the person could earn if they also maintained and repaired the cart on their own — another 6 copper coins a day.What was the Aurangzeb economy like?In letters to his favourite son Muhammad Azam Shah (whose contents range from Aurangzeb envying Azam’s cook who made biryani one winter and chastising him for the death of a canopy bearer because he was riding too fast), Aurangzeb wrote about the taxes merchants and travellers end up paying on the road. Akbar had initiated a system of recorders or reporters — 14 clerks who took turns to put together reports from royal departments and write down all royal orders. One such report, Aurangzeb wrote, said that:“The tolls on merchants and travellers bring forth every year from Rs 15,000 to Rs 16,000 but the district treasurer and the police officer do not send to the royal treasury more than Rs 1,000 or Rs 2,000.” He added:“This is not rahdari (toll tax) but rahzani (robbery). The use of this property of the people by the king for his private expenses is unlawful.” Aurangzeb went on to ban this transit duty along with 79 other taxes — including taxes on food and beverages — while he was on the throne. It is believed now, however, that the abolition was either temporary or not implemented in every part of the Mughal empire.But the reintroduction of jizya, the tax to be collected from those who were not Muslim, in 1679 is possibly the one brought up the most in discussions about his religious zealotry and what is called his bad administration. The tax had not been in force for about a century. So, while a small section — Rajput and Maratha state officials and Brahmin religious leaders — did not have to pay, it was suddenly an additional burden on people who were already scrounging to pay their taxes. There were allowances though. After a 1688 drought in Hyderabad, a 1704 famine in all of the Deccan — jizya was suspended. When small farmers were immersed in debt, they were exempted from paying.But why 22 years after taking the throne? Medieval historian Satish Chandra wrote that European travellers put it down to two things — dwindling reserves to fund his wars and a desire to convert Hindus. The first makes sense initially — by the 13th year of his rule, expenses had far surpassed income. He had been waging continuous wars in the Deccan and the jagirdars he hoped would surrender some of their income to his cause did not. But while jizya collections are estimated to have been about 15% of the total revenue under Aurangzeb, the money went to a separate treasury meant for charity.As for the second, he wrote, there is no proof of large-scale conversions and had it happened Aurangzeb’s own chroniclers would have eulogised the policy.So, it’s a good idea to keep in mind that while historical narratives might sometimes seem neatly drawn up, they never are. And sometimes, things are just about politics and not really faith — Aurangzeb apparently did consider jizya at the beginning of his reign but put it off because he needed political alliances with Hindu kingdoms. But by 1679, his negotiations with Shiva ji had failed and settlements with smaller kingdoms no longer seemed like an option. The political compulsions were gone and the jizya was back.Does that make it better? No. But it is evidence that decisions by rulers always have been driven by a set of calculations of weighing popularity among one section against disdain from another. Another example is the tax on traders. Aurangzeb abolished that for Muslims. But the context is that the tax was already preferential before that — Hindu traders had to pay 5% duties and Muslim traders 2.5%. But for parsimonious Aurangzeb, being cheated of his money was an offence he would not let pass. So, in the 25th year of his rule, the 2.5% tax for Muslim merchants was brought back. Because they had been helping Hindu merchants evade taxes by using their own exemptions. And when the British and Dutch companies refused to pay the 3.5% jizya, he simply raised duties on imports from 2% to 3.5%.There was, however, some form of class justice — probably because of Aurangzeb’s god-fearing ways. In 1665, he issued a farman to a revenue official with detailed instructions on how to collect revenue in a fair manner — discover actual conditions of farming every year for tax assessment, encourage rich farmers to expand cultivated area, ensure banned taxes are not imposed on poor farmers and to make a fresh assessment if a calamity destroys the crop.He also issued daily cash grants, called wazifa, to Brahmins who were poor or had many children. During a drought in Gujarat from 1684 to 1686, he ordered a one-year remission of grain taxes. And he prohibited Gujarat officers from buying grains from farmers at low prices and selling them off for much higher prices.So suspicious was he of people misappropriating money that he wrote to his confidante that the Sharif-i-Mecca (chief of Mecca appointed to oversee pilgrims) sends an envoy each year to take money from him, adding, “We should take care whether the money is distributed among the poor or is wasted by the Sharif.” Another major change under Aurangzeb was that of property inheritance. Mughal laws dictated that if a noble died, everything they owned was listed and the state took over. If the noble owed anything to the empire, the dues were paid from this pool. Whatever was left was distributed among the noble’s heirs. Aurangzeb changed the law so the state would take over only if there were any dues.Did his relentless warfare destroy the economy?The last 27 years of his life — and the resources of the empire — were drained by the wars on Marathas. Aurangzeb had moved his entire court to the Deccan and, by 1689, had acquired the Bijapur, Golconda and Maratha kingdoms. But the Jinji Fort (in what is now Tamil Nadu) was a difficult siege to execute. It ended up taking eight years. All while other campaigns against Marathas in the Deccan continued, Mughal empire historian John F Richards wrote.The Mughal Deccan territory grew 21%. But these newly acquired lands did not add up to much in terms of revenue. Because the Maratha offence strategy was launching raids. The Mughals would hit back. Farmers unwilling to be caught up in this ceaseless crossfire fled. Collecting revenue got difficult and Mughal officers often ended up fighting over the remaining lands where some revenue could be extracted.All of this translated into a constant revenue shortfall. Mughal historian Shireen Moosvi wrote that for the entire empire, the tax actually collected was 67% of what had been assessed. In the Deccan, it was just 52%. Meanwhile, as more and more Deccan nobles entered Mughal service, they had to be assigned their own jagirs. But land is a finite resource. Besides, there were administrative difficulties as well. How would a noble posted in the Deccan look after a jagir in the north? The Deccan wars cost Aurangzeb one lakh soldiers and three lakh animals (horses, oxen, camels and elephants) a year. And keeping a standing army ready all the time meant getting more and more forces from up north — how long would they stay on before getting impatient? It seemed like a war that would never end.“Old age is arrived: weakness subdues me, and strength has forsaken all my members…I have not been the guardian and protector of the empire. My valuable time has been passed vainly,” an 88-year-old Aurangzeb wrote in his last letter. He died in 1707. His three sons fought each other for succession and his second son prevailed. He died five years later. And the Deccan provinces Aurangzeb whose pursuit gave more than half his reign to were all gone in the next few years.Lead illustration: Sajeev Kumarapuram

The British Era

SWAMINATHAN S ANKLESARIA AIYAR, August 13, 2023: The Times of India

In his bestseller ‘An Era of Darkness: The British Empire in India’, which is a devastating demolition of the British Raj, Shashi Tharoor also cites Maddison extensively.

His long thesis cannot be discussed fully in a short column, but we can discuss his citations of Maddison. Maddison’s magnum opus ‘Contours of the World Economy, 1-2030 AD’ has figures slightly different from Tharoor’s. Maddison says India’s share of world GDP was 24. 4% in 1700 before British rule but fell to 4. 2% by 1950. Tharoor says, “The reason was simple. India was governed for the benefit of Britain. Britain’s rise for 200 years was financed by its depredations in India. ” 
Do Maddison’s actual figures support this? Between 1700 and 1950, Indian GDP went up from $90 billion to $222 billion, the fastest growth ever. India’s share of world GDP fell not because it was impoverished but because the Industrial Revolution helped other countries grow much faster. Improvements in health, and a British-enforced peace between princely states that had historically constantly warred, helped population soar from 165 million to 359 million. By contrast, the population grew not at all in the Hindu period, a grim reminder of how difficult things were in pre-British days. 
Was colonial rule the reason for India’s relatively low income and Britain’s high one? Maddison’s data does not support this claim. Even in the pre-colonial period 1000-1500 AD, Britain’s annual per capita income growth was thrice India’s 0. 04%. In 1500-1820, which was mostly pre-British, India’s per capita growth was minus 0. 01% against Britain’s 0. 27%. In 1820-70, the heyday of East India Company loot, India’s growth was 0% against Britain’s 1. 26%. In 1870-1913 under British rule, India had its fastest growth ever of 0. 54% per year. But that fell to minus 0. 24% in the final British phase 1913-50, when India was hit by the Great Depression and sharp decline in per capita food availability.

Britain’s own annual per capita income growth declined below 1% in 1870-50, not a sign of huge colonial benefit. When it lost its colonies in 1950-73, Britain’s per capita income growth rose to a record 2. 4%. This contradicts the thesis that Britain grew fast because of colonial exploitation. Its growth was due mainly to higher productivity. Colonialism helped but was not key.

On financial flows from India to Britain, Tharoor cites Maddison. “There can be no doubt there was a substantial outflow for 190 years. If these funds had been invested in India, they could have made a significant difference. ” This is surely true. Yet Indian history shows that tax revenues were typically not invested but wasted in luxurious aristocratic living and non-stop wars that left many rulers unable to pay their soldiers on time, encouraging loot. Hence, GDP grew slowly.

The East India Company looted the Indian aristocracy. But this hardly affected the Indian masses, who paid much the same taxes. The princely states, ruling 40% of British India, did not hand over their revenue to the Raj, yet their economic growth was very weak overall (with exceptions like Travancore). This suggests, alas, that keeping tax revenue in India did not benefit the masses or economic growth. The Nizam of Hyderabad was reputed to be the richest man in the world, but the areas he ruled remained among the poorest in India. Nationalist historians think India would have had a faster industrial revolution without the British Raj. The performance of the princely states — notably the biggest, Hyderabad — suggests otherwise.

Tharoor says British taxation was very onerous. Maddison, however, says that taxation of peasants was around 15% of GDP in Mughal times but plummeted to 3% by the end of British rule. The East India Company expropriated the Mughal aristocracy. But after direct rule from London, taxes were fixed in nominal terms which were eroded away by inflation. This not only slashed real taxation of the peasantry but greatly reduced their real debts too. British colonialism ceased to be profitable, one reason why it ended so smoothly.

This column does not assess the totality of British rule or Tharoor’s book, which has brilliant passages. But it shows that Tharoor has cherry-picked citations from Maddison to bolster his thesis. Maddison’s full picture is less critical of the Raj, highlighting its eight-fold increase in irrigation. The debate goes on.

1962- the prsent

See Economy: India 1


Start-ups: India

See also, Start-ups: India

Number of unicorns created, 2011-19
From: Dec 31, 2019: The Times of India

See graphic:

Number of unicorns created, 2011-19


Dec 31, 2019: The Times of India

Companies, the invested amount and the investors, 2019
From: Dec 31, 2019: The Times of India

See graphic:

Companies, the invested amount and the investors, 2019

The Indian startup industry has come a long way. In 2010, startups raised just $550 million in venture funding, according to data from Tracxn.

At the time, top venture capital firms, like Sequoia Capital India and SAIF Partners, built portfolios in public markets and nontechnology investments, as India’s digital economy lacked depth. Online retail was just about starting out as Flipkart, Myntra and Snapdeal raised their first rounds of venture funding.

Since then, startups have changed the way consumption happens in India, thanks to the proliferation of smartphones and cheap data. The funding landscape in 2019 looked like this: 1,096 startups and venture capital-backed firms raised $14.4 billion — a 25-time increase in capital flow from 2010. Global investors, from Japan to Silicon Valley, have been pouring capital into firms, hoping these companies will leapfrog traditional business models in retail, payments, digital and other segments.

Already, some have established a strong mainstream presence, and this is evident from their association with India’s favourite sport: Paytm has been the title sponsor of the Indian cricket team since 2015 and edtech unicorn Byju’s replaced Chinese smartphone maker Oppo as the team sponsor earlier this year. Paytm founder Vijay Shekhar Sharma and venture investor Avnish Bajaj of Matrix Partners India reflect on the past decade and share their wish list for the coming one.


Biggest game changer of the decade

“Billion-dollar funding rounds. At the start of 2010, raising Rs 100 crore, or $25 million, was considered a large round. Today, companies raise $1-billion round in India,” he said. In 2010, he was preparing to take his company, which focused on mobile value-added services at the time, for an IPO at a valuation of less than $100 million.

The plan was dropped, and Sharma steered the transformation to digital payments. Paytm is now worth $16 billion.

“The most formative event of the last decade was Flipkart raising $1 billion in July 2014, and we, at Paytm, have done it twice since then. These mega capital raises have been a culmination of investor appetite, talent in the country and size of the market. This is one thing I didn’t expect would happen in India,” he said.

Game changer for the next decade

“Valuation was the buzzword in this past decade. But in the coming one, startups should be known by how many billions in profits they generate. Entrepreneurs face a lot of opposition and scepticism; our methods are considered unconventional. I hope startups and digital businesses create billions in profits and give critics a fitting answer,” he said.


Biggest game changer of the decade

More startups are toiling to stay in the game for the long haul instead of searching for quick exits. “The biggest positive surprise was the choice made by a number of founders to build to last. M&A activity was much lower than expected, apart from the Flipkart exit,” said Bajaj, who co-founded Baazee that was acquired by eBay in 2004, one of the first M&A exits in the Indian internet economy.

The announcement by Oyo’s founder, Ritesh Agarwal, to buy back close to 13% stake from early investors for $1.3 billion by taking a loan is being seen as an unprecedented move globally. “A very gutsy step by Ritesh!” said Bajaj, whose company has backed businesses like Ola, Dailyhunt and Mswipe.

Game changer for the next decade

According to him, the next step for Indian startups is to become more sustainable and mature, and to go for IPOs. “I would like to see 15-20 listed Indian internet companies that perform well in the public markets,” he said.

The top trends

Dec 31, 2019: The Times of India


From unicorns like Zomato to mid-stage companies such as online pharma delivery player Medlife and meat delivery startup Licious, firms are giving the title of co-founder to new and existing executives. Gaurav Gupta and Ananth Narayanan joined Zomato and Medlife, respectively, years after the companies were launched, but they are still called co-founders. The strategy underscores the importance of executives and operators in the startup ecosystem. The trend is not entirely new. In 2006, Makemytrip’s Deep Kalra accorded the status to Rajesh Magow, the India CEO. But today, this approach has gained more significance. The Indian internet market is getting more competitive and firms need operators who are also recognised as co-founders by employees.


Big tech companies such as Facebook and Google faced greater scrutiny from regulators, lawmakers and employees in the US in 2019. India, too, witnessed a version of the pushback against large digital companies. This included changes in online retail laws, protests against food delivery players and the data privacy bill. Data localisation has become a major sticking point between the industry and the Indian government. A key fight on this front has been the entry of Facebook-owned WhatsApp into the payments business. The payments service has been stuck in beta since early 2018 because of a variety of reasons, including access to encryption and concerns over fake news on Facebook’s platform.


A billion-dollar valuation does not necessarily mean success. Shopclues, which was valued at $1.1 billion in 2016, was sold at a valuation of less than $100 million to Singapore-based e-tailer Qoo10 in November. Shopclues had raised over $257 million in funding from the likes of Singapore’s GIC, Tiger Global, Helion Venture Partners and Nexus Venture Partners. But it struggled with several issues, including a fight among its founders and competition from Flipkart, Snapdeal, Amazon and Paytm Mall.

Several startups in the Indian market — Jabong and Freecharge, for instance — have been sold for far less than their original or perceived valuations. But Shopclues was the first that claimed to be a unicorn.


For SoftBank-backed Oyo Hotels & Homes, 2019 was a year of ups and downs as it hyper-charged its aggressive expansion across the world. The most audacious move was the over $2-billion loan that founder Ritesh Agarwal, 26, took to triple his shareholding to 30% and infuse fresh capital into the business. The secondary transaction has been done at a valuation of $10 billion, double of Oyo’s valuation last year. The company has expanded to Europe with $415 million buyout of @Leisure Group and is opening 200 properties in the US. It has bought Hooters Hotel & Casino in Las Vegas.

The second half of the year was tough for Oyo. It is facing a revolt by hotel owners in India and China.

Recently, Oyo said it had laid off up to 500 employees.


There are roughly 12 million kiranas in India. More and more startups are building business models to cater to this section. The services they offer include digitising ledgers and improving the supply chain. Kirana-focused startups raised over $260 million in funding in 2019, according to data compiled by Avendus Capital for TOI as against $70 million in 2018. Digital bookkeeping players OkCredit and Khatabook and logistics tech firm Elasticrun are among them. Udaan, which operates in a broader space, saw some of the largest funding rounds.


2019 was the breakout year for a new generation of startups in urban mobility and online retail space, as they attracted big funding and witnessed high growth. These firms are seeing faster growth than traditional players, though on a smaller base. It remains to be seen if they become a threat. In mobility, Sequoia- and Accel-backed Bounce is taking on Matrix- and Ola-backed Vogo in the scooter rental space. Bounce CEO Vivekananda HR tweeted in October that the platform had crossed 1 lakh rides a day in Bengaluru, about 13 months after launching a dockless option. Bike taxi player Rapido now records 5 million rides a month, up from 2.2 million rides a month in May this year.

New players have also emerged in the area of social commerce. Bulbul, Simsim, Dealshare and Wmall are leveraging video and social media to sell goods, raising their first major rounds of funding. Social commerce platform Meesho, which uses a network of resellers, raised $125 million from Facebook and Naspers this year.


In 2019, serial entrepreneurs and executives, who had previously worked with high-growth startups, were able to raise capital with some ease, at times without a business plan. They include CitrusPay co-founder Jitendra Gupta, who is starting digital banking firm Jupiter; Amit Lakhotia, a former Paytm and Tokopedia executive, who is building a venture for car parking management; and Nipun Mehra, a former Pine Labs and Flipkart executive, who is launching a B2B commerce venture for Southeast Asia. What has also helped VCs build conviction about signing large cheques at the idea stage is the amount of follow-on capital startups like Cred, started by Freecharge co-founder Kunal Shah; Curefit, built by Myntra’s Mukesh Bansal; and Udaan, a venture by former Flipkart executives, have attracted. These founders launched companies which have unique localised business models.


A battle for market supremacy in online retail and cab hailing marked the Indian startup scene’s years from 2014 to 2017. But in the past two years, the fight in digital payments and online food delivery spaces has grabbed the spotlight. It’s an expensive battle, according to the latest set of numbers. SoftBank-backed Paytm, Walmart-owned Phonepe and Amazon Pay suffered a collective loss of over Rs 7,283 crore ($1 billion) in the financial year that ended in March 2019. A staggering increase of 167% from Rs 2,729 crore ($386 million) in the fiscal ending March 2018. If one includes Rs 1,028 crore Google Pay spent on cashback during FY19, the loss figure for the industry stands at Rs 8,311 crore.

The total reported losses also shot up in online food delivery: Swiggy saw them increase nearly six-fold to Rs 2,364 crore (FY19), while Zomato saw them jump by 24 times to Rs 2,058 crore from Rs 84 crore in FY18. Ola-owned Foodpanda reported 230% increase in losses at Rs 756 crore, while UberEats’ India business is dragging down its global margins.

Record capital, mega rounds

Dec 31, 2019 The Times of India

Companies founded and the funding amount, 2014-19
From: Dec 31, 2019 The Times of India
Years, the funding amount and the funding rounds, 2014-19
From: Dec 31, 2019 The Times of India

India’s startup industry was flush with funds in 2019 as capital flows peaked. TOI examines the developments and data that made the year an important milestone for the ecosystem


There were a record number of rounds of over $50 million — 62, up from 32 in 2018. The number of investments of over $100 million stood at 27 as against 17 in 2018 and just 10 in 2015. The boom in 2018-19 was different than the 2014-15 cycle because capital was concentrated in fewer companies. 2019 saw the return of hedge funds such as Steadview Capital, Tiger Global Management and Falcon Edge Capital. Plus, the arrival of a new set of investors at mid-stage — PE firms Goldman Sachs and General Atlantic and Chinese investors Tencent and GGV Capital, which have become increasingly active in the market.

“The good thing in 2019 was that there was decent amount of capital available at B and C stages, so most of our scaling and scaled companies managed to raise new rounds. Our advice to companies is to be prudent about how much cash you spend,” said Subrata Mitra, founding partner at Accel India.

Availability of capital has allowed startups to raise multiple rounds within 12 months. The result: their valuations have jumped.

For example, Home services marketplace UrbanClap’s valuation nearly doubled to $930 million in eight months and Meesho’s valuation almost tripled to $700 million in a similar period. Even software firms have seen their valuations grow.

But now, the number of these quick capital raises are taking longer and there are instances of investors pulling out of these rounds. “Fundamental questions come at the very end and confidence gets tested. There is a palpable nervousness and a much higher sense of paranoia in companies,” said a venture capital investor, who didn’t want to be named.


There were fewer new startups in 2019, nearly halving to 1,929 from 3,834 in 2018. The activity of starting up hit a high of 13,452 in 2015. Angel and seed funding, i.e. financing at idea stage, peaked the following year with 1,330 investments. Since then, angel funding and the number of new startups have fallen as many people realised that entrepreneurship or investing is not their cup of tea. The concerns over angel tax have also been a deterrent at early stage.

2019 began with an uptick in early-stage investment activity as the country’s largest venture capital firm, Sequoia, announced an accelerator-cum-seed-funding programme called Surge. This, in turn, prompted several VC firms, including Matrix Partners India and Silicon Valley accelerator Y Combinator, to step up their early stage activity. A record number of startups from India were picked for summer and winter batches. Accel, Blume Ventures and Venture Catalysts are the other active investors at early stage.


2 019 was a record year for both startups and digital companies in terms of capital raised. The ecosystem received $14.4 billion of investment, a 35% increase compared to 2018, though the number of startups that attracted capital fell by 17%, according to data intelligence platform Tracxn. There were 1,096 deals in 2019. The previous record for capital was registered in 2017, when two mega investments by SoftBank — $2.5 billion in Flipkart and $1.4 billion in Paytm — lifted overall industry numbers.

Global investors remain confident about the Indian digital growth story. Consider the case of EtechAces Marketing and Consulting, which owns online financial services portals PolicyBazaar and Paisabazaar. In 2019, New York-based Tiger Global Management began talks to sell its 21% stake in EtechAces. It had first invested in 2014, when EtechAces was valued at less than $100 million. That valuation has now increased to over $1.5 billion. While Chinese internet conglomerate Tencent was already taking 10% stake, as EtechAces CEO Yashish Dahiya wanted them on board as investors, investment bank Avendus Capital was asked to get investors for remaining shares worth about $150 million. “Within three weeks we got over $1 billion of excess demand from who’s who of the financial investment world. If you can think of them, they were there,” Dahiya told TOI. Tiger Global eventually decided not sell the remaining 10% stake; the sale was called off. Dahiya declined to disclose the reason. Perhaps Tiger Global executives wondered why they were exiting a company which was drawing more global investors.


The Japanese technology and investment major remained in the headlines across the world, especially in Silicon Valley, for the wrong reasons. SoftBank’s biggest setback was coworking player WeWork’s botched public offering, which pushed its valuation down from $47 billion to $8 billion after a mega bailout package. The debacle also contributed to the ouster of WeWork founder Adam Neumann. The episode resulted in SoftBank cutting the expected size of its new Vision Fund to half of $108 billion it had planned earlier.

But despite the troubles, it continues to dominate mega rounds in India; it led or made follow-on investments in six of the top 10 deals. Its biggest deal was the $800-million infusion in hospitality startup Oyo. In new transactions, SoftBank backed eyewear retailer Lenskart, logistics startup Delhivery and electric vehicle infrastructure player Ola Electric.

Some major capital raises in 2019 were Paytm’s $1-billion deal with T Rowe and Ant Financial, which put its valuation at $16 billion, and business-to-business commerce major Udaan’s $585-million raise, which increased its valuation to $2.8 billion.

Tycoons faced bankruptcies, jail, death

Dec 31, 2019 The Times of India

NEW DELHI: For many Indian tycoons, 2019 turned woeful as lenders -- empowered by the nation’s recent bankruptcy law and desperate to clean up soured debt from their books -- started seizing assets of delinquent firms or dragged them into insolvency.

Indian banks wrote off a record $39 billion of loans in the 18 months through September in a bid to repair their balance sheets as they battled the world’s worst bad debt pile. Making matters worse, a shadow banking crisis led to a funding squeeze, crushing debt-laden businesses that were critically dependent on rollover financing.

“Life has come a full circle for tycoons that had enjoyed debt-fueled growth,” said Nirmal Gangwal, founder of distress and debt restructuring advisory firm Brescon & Allied Partners LLP. “Many firms collapsed like a house of cards. The downfall was rather unprecedented.”

The government has also been cracking down on economic crime to assuage public anger over absconding businessmen. It’s even barred some from traveling overseas if they were deemed a flight risk.

Here are some of the country’s biggest and most-storied businessmen who saw their fortunes fade. Spokespersons for these tycoons didn’t immediately reply to emails and text messages seeking comments.

Anil Ambani

The chairman of Reliance Group, which makes movies to metro lines, had a close shave with jail time in March before his elder brother and Asia’s richest man, Mukesh Ambani, bailed him out at the last minute. The woes of the ex-billionaire came to the fore when India’s top court asked him to pay Ericsson AB’s India unit about $77 million of past dues or go to jail since Anil Ambani, 60, had given a personal guarantee. His telecom carrier slipped into insolvency this year, while unprofitable Reliance Naval & Engineering Ltd. faced a cash crunch. Reliance Capital Ltd. is selling assets to pare debt. Ambani is also fending off Chinese lenders in a London court.

Malvinder & Shivinder Singh

Karma caught up with ex-billionaires and brothers Malvinder Singh, 47, and Shivinder Singh, 44, and how. Scions of a prominent business family, they once helmed India’s top drug maker and second-largest hospital chain.

In October, the two were arrested on charges of fraudulently diverting nearly $337 million from a lender they controlled. India’s market regulator found in 2018 that the brothers had defrauded their hospital company of about $56 million. The collapse of the $2 billion empire turned brother against brother, prompting their mother to broker a peace deal that was short-lived. In February, Malvinder accused Shivinder and their spiritual guru of fraud.

Shashikant & Ravikant Ruia

After a hard-fought battle to keep their flagship steel mill, the first-generation entrepreneurs finally saw the bankrupt Essar Steel India Ltd pass on to ArcelorMittal last month.

The $5.9 billion takeover was almost two years in the making with multiple legal wrangles. The group, controlled by Shashikant Ruia, 76, and Ravikant Ruia, 70, were also reprimanded by a UK judge in March this year for concealing documents. Started in 1969 as a construction firm, Essar Group diversified, investing about $18 billion between 2008 and 2012, and piled on debt. In 2017, the group had sold another prized asset, Essar Oil.

VG Siddhartha

Before jumping off a bridge into a river in July in an apparent suicide, the founder of India’s biggest coffee chain Cafe Coffee Day had penned a letter that spoke of pressure from lenders, a private equity firm and harassment by tax officials. He had spent much of the last two years pledging ever more of Coffee Day Enterprises Ltd. shares to refinance loans for ever shorter periods, at ever higher interest rates. “I would like to say I gave it my all,” VG Siddhartha, 60, wrote in the letter. “I fought for a long time but today I gave up.”

Naresh Goyal

The former ticketing agent who built India’s largest airline by value, stepped down as chairman of Jet Airways India Ltd in March, caving in to pressure from banks who took over the company. Cut-throat price wars and surging costs pushed Jet deeper into loss. The airline stopped flying in April and went into bankruptcy two months later as lenders failed to find a buyer. In July, an Indian court barred Naresh Goyal from flying overseas after the government said it was investigating an alleged $2.6 billion fraud involving Jet Airways.

Rana Kapoor

The founder of Yes Bank Ltd, which became India’s fourth-largest non-state lender, tweeted in September 2018 that his shares were invaluable and requested his children never to sell them upon inheritance. But trouble was brewing. The nation’s banking regulator, which found the lender had repeatedly under-reported its bad loans, refused to extend his tenure as chief executive officer. This forced Rana Kapoor, 62, to step down by end-January. Kapoor, who had pledged some of his Yes Bank shares in July, sold almost his entire stake in the lender by October.

Subhash Chandra

The rice trader-turned-media mogul, 69, who brought cable television into Indian homes in the early 1990s with his ZEE TV, resigned as chairman of Zee Entertainment Enterprises Ltd. in November and lost control of his crown jewel. To help pay the debt of Essel Group, Subhash Chandra has been selling stake in Zee Entertainment in the past few months to repay group’s debt.

Gautam Thapar

A default by Gautam Thapar, founder of the paper mill-to-power transmission Avantha Group, on pledged shares made Yes Bank Ltd the biggest shareholder in CG Power and Industrial Solutions Ltd. In August, the firm was hit by an accounting scandal forcing the board to remove Thapar, 59, from the chairman’s post. A month later, the market regulator ordered a forensic audit of the firm and barred Thapar from accessing securities market.

See also

Economy: India 1

Economy: India 2 (Ministry data)

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