The vision of the Indian economic regime erected in the 1950's emerged from the freedom struggle. The economy had been dominated by metropolitan capital and metropolitan commodities in the pre- independence period. Freedom meant freedom from this domination; and this could not be ensured without giving the State in independent India a major role in building up infrastructure, expanding and strengthening the productive base of the economy, setting up new financial institutions and regulating and co-ordinating economic activity. In terms of the strategy elaborated at that time, the State would not merely ensure a sharp increase in the rate of savings in the system, but also an enhanced allocation of that savings to the heavy industrial sector in general and machine tools in particular, so as to reduce the economy's dependence on international capital and commodity markets. This was necessary for building capitalism itself, though some no doubt entertained the fond hope that all this would add up to a transition to socialism. State capitalism and State intervention in other words were essential instruments for the development of a relatively autonomous Indian capitalism, displacing metropolitan capital from the pre-eminent position it had occupied in the colonial economy.
 
It should be clear that the new economic regime being instituted currently constitutes a decisive break from the regime sought to be put in place immediately after Independence. International capitalist agencies like the Fund and the Bank were opposed to the displacement of metropolitan by domestic capital from the very beginning, as were the metropolitan States: they resented the cordoning off of the domestic market against the penetration of metropolitan commodities; they resented the continued existence of a State capitalist sector; and they resented the plethora of regulations upon capital, especially metropolitan capital. The rhetoric of the State at present, influenced no doubt by pressures from the international financial institutions, is that the only route to growth and development in the current world order is dependence, or as is more euphemistically put, the exploitation of interdependence through the mechanism of the market. Any effort to reserve domestic economic space for domestic interests, to directly influence the pace and pattern of domestic development or to alleviate the inequalising tendencies characteristic of backward capitalism, only forecloses growth opportunities and spells stagnation. Tethering oneself to the powers that dominate the international economic order and allowing the "animal spirits" of the private investor free play are the main mechanisms to stimulate growth.