
Contents
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Protecting Industry from Predatory Capitalists Protecting Industry from Predatory Capitalists
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The Mundhra Case: Share Speculation as a Fine Art The Mundhra Case: Share Speculation as a Fine Art
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Social Engineering through Fiscal Policy Social Engineering through Fiscal Policy
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The Mundhra Episode The Mundhra Episode
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Opposition to the Socialist Pattern: The Forum of Free Enterprise and the Democratic Research Service Opposition to the Socialist Pattern: The Forum of Free Enterprise and the Democratic Research Service
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‘Right reaction’ Within and Outside the Congress: Krishnamachari’s Exit, Re-entry, and the Battle Rejoined ‘Right reaction’ Within and Outside the Congress: Krishnamachari’s Exit, Re-entry, and the Battle Rejoined
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Six Private Industry and the Second Five-Year Plan: The Dalmia-Jain and Mundhra Episodes
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Published:August 2015
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Abstract
The Dalmia-Jain Group had honed processes of inter-firm and intra-firm financial transactions into a legally unchallengeable system. Their procedures were so convoluted that the government established a commission to investigate their group’s financial nexus. Equally, Haridas Mundhra’s use of cash reserves accumulated in firms owned by him to acquire an increasing number of companies, without the intention of furthering capital investment, reinforced the need for effective regulation. Simultaneously, the Second Five-Year Plan had set large targets for private industrial investment. In a sophisticated measure to cajole movement away from share and commodity market speculation, the government introduced the Compulsory Deposit Scheme, whereby tax relief on depreciation funds was admissible on proof of capital expenditure on modernization or expansion. However, T.T. Krishnamachari, the finance minister responsible for the fiscal innovations, overstepped the limits of the State’s autonomy from big business interests and was forced to resign.
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