The examples of the United States and the United Kingdom are grossly misleading in this context. The Anglo-Saxon world is the home base of international finance. In a world where finance is left entirely free to move all over the globe, it would tend to gravitate to the Anglo-Saxon world as a matter of course, and, from that base, make forays elsewhere, wherever opportunities for quick gains present themselves. The gravitation of finance into these countries creates job opportunities in the financial sector that are massive compared to the size of the home population (for instance, the U.K.), or generates spending booms (for instance, the U.S.). In countries like India, by contrast, openness to financial flows has the opposite effect of enforcing deflation, and hence stifling growth, because finance has to be enticed not to leave our shores. What is sauce for the U.S., therefore, is not sauce for India.
 
This is precisely the argument against financial liberalisation in India. It exposes the country to the tyranny of international finance which is not only anti-democratic and anti-people in an obvious sense (the latter via cuts in subsidies and social expenditures), but is even counterproductive for growth. The Budget, however, marks a major step towards financial liberalisation. The proposed autonomy for the Reserve Bank is one component of it, though a striking one; but there are others. Public sector banks are to be privatised by reducing government equity to 33 per cent in accordance with the recommendations of the Narasimham Committee. (The Finance Minister's claim that "this will be done without changing the public sector character of banks" means nothing, since private, including foreign, financiers can hold shares through nominees; indeed the same Narasimham is on record as wanting these banks to have one-third government, one-third foreign, and one-third Indian private equity.)
 
Indian capitalists would be allowed to export finance capital for taking over companies abroad, and hence, in general, for speculative activities on stock markets elsewhere. Metropolitan finance capital, in the guise of Foreign Institutional Investors, would be allowed up to 40 per cent equity in Indian companies, enlarging the scope not only for a "denationalisation" of Indian industry but also for a bunch of foreign speculators to dominate the sphere of production. Major concessions, including tax conc essions, would be offered to financial firms specialising in providing "venture capital", that is, high-risk and speculative investment.
 
These measures of financial liberalisation, in their totality, entail three basic changes: first, the removal of the financial system from the ambit of public accountability; second, the elimination of the subservience, in principle, of the financial sector to the needs of the productive economy, and the conferment upon it of the kind of autonomy that allows speculation to take precedence over production; and third, the removal of the insulation from the vortex of financial flows that India's financial system has enjoyed till now. (Though this insulation was being undermined during the liberalisation era, the present move carries it far forward.)
 
These are fundamental changes. The economic regime set up in India after Independence, which had planning, self-reliance and sovereignty as its cornerstones, had erected a financial system appropriate for this purpose, involving public control, public ownership and public accountability. International finance capital has been trying assiduously to destroy these features. The Finance Minister's announcements show that it is succeeding. Not that this single Budget would change the entire system at a stroke, but its direction is clear, unmistakable, and dangerous. By pursuing the path of "financial liberalisation" which the Budget unfolds, not only would we have "Wall Street Capitalism" (which even economists advocating "liberalisation" deride) figuratively imported into India, but India would get attached to Wall Street Capitalism in actuality.
 
The overall thrust of this Budget is marked by an anxiety to please metropolitan capital even as it shows remarkable unconcern towards the interests of the nation. This is apparent from the fact that it lowers customs duties while at the same time raising excise duties (a sure prescription for de-industrialisation), from the coercion exercised on all State governments to carry through power sector reforms as desired by the World Bank, and from the virtual demolition job it carries out on the public distribution system. Opening up the economy to the tyranny of international finance capital betrays the same thoughtless subservience.