The paper tries to challenge the conventional account of India’s politico-economic development after Independence. It starts from analysing the difficulty that a former colony such as India faced, namely to constitute a polity with a sovereign curreney in a world of established monetary economies. Like others, the country did not succeed in coping with this difficulty, i.e. it was not possible to constitute macroeconomic coherence being a precondition for self-sustaining income generation as well as for stabilisation without risking to entirely upset the social fabric. It is argued, secondly that Indian governments reacted by establishing a regime that may be called redistributive. The redistributive regime had its macroeconomic rationale in serving to suppress inflation in the process of planned development. It is thus maintained, finally, that the present crisis requires to re-constitute India’s monetary economy by way of a currency reform.
