Financial liberalization and the Indian non-financial, corporate sector

Abstract

A distinct feature of the India’s path of financial liberalization is that it led to the emergence of the corporate, non-financial sector, rather than the financial sector as the key wedge for the penetration of global finance. Neoliberal reforms eroded the traditional role of development banks and state-directed credit and empowered a section of large corporations and non-financial companies in India. The partial, calibrated path to capital account liberalization has meant that this section of the Indian non-financial corporate sector, rather than the commercial banking system came to be the conduit integrating the Indian economy with international financial markets. Where the Indian state had earlier harnessed finance towards developmental priorities, it shifted to channeling finance in service of the internationally embedded segment of the corporate sector that enjoys disproportionate access to both the domestic financial system and international financial markets.

Corporate power and the rise of intangibles: A study of Indian firms

“…Figure 1(a) indicates that the share of intangibles as a proportion of “serviceable” assets of firms, remained rather muted until 2008 after which it accelerated rapidly. This is similar to the trends detected by Ganguly and Vasudevan (2023). The acceleration was particularly striking after 2011 until it reached its peak in 2018.…”

“…From franchises and branding, to the informational asymmetries derived from digitized supply chain management, there are numerous examples of how actors can “exercise authority over a defined domain and population without the plain attributes of power imparted by sovereign rights” (Graz, 2019: 29). The role of intangible assets in this context has drawn the attention of political economy scholarship in recent years, but by and large the focus of these studies has been the Western world (Ganguly and Vasudevan, 2023). Few, if any, have looked at the case of India, which is surprising given the country’s economic weight in the global economy and its membership into an elite club of 20th century “growth accelerators” (Hausmann et al, 2005; Nagaraj, 2023).…”