ABSTRACT
This chapter looks at the role of finance in the structure of the Indian corporate economy. The compelling story of the interlinkages between Indian informal financial institutions and formal banking has a long history from the pre-modern period though a dramatic expansion of Indian formal private banks which occurred under British colonialism. The chapter explains the 'spin-offs' of this early interaction between these Indian financiers and British investors, which was charged and animated by law. The restrictive macroeconomic policies of state nationalization, state subsidies to support priority industries and the lack of a global role for Indian industries produced a clear narrative of stagnation. This was replaced after the 1983 economic crisis with a policy of industrial renaissance. This black market economy in gold exposed the Indian rupee to disastrous fluctuations and eventual devaluation. The Indian stock market has expanded – in fact, tripled – just in the last three years.
