Every Finance Minister, from the Congress or the BJP, has spoken in one voice about Foreign Direct Investment (FDI). Originally, for some like Manmohan Singh and P Chidambaram, not that foreign direct investment was needed, but without it we would perish.

This turned FDI into a national economic status symbol, even a benchmark to assess India. Repeatedly, economic commentators used to compare the FDI received by China and the FDI received by India to denigrate India as an inferior economy, that is, an inferior country. Psychologically, this eroded the nation's confidence.

A top bureaucrat, who occupies a high position again, even used to advise Indian businessmen to sell their manufacturing companies to foreigners, implying only foreigners - not we - were competent for that. Foreign consultants advised Tatas to divest Tisco and Tata Motors, that is, sell them to foreigners, and concentrate on Tata Consultancy Services.

Thus, as if by design, national confidence was eroded and in effect this created a foreign dependent mindset. This was how the quest for FDI, far from being an economic tool, became an instrument to destroy national confidence. This national defeatism was reversed by one event, a non-economic, even anti-economic event - the Pokharan atomic explosion. Even the author of Pokharan, Prime Minister Atal Behari Vajpayee, might not have foreseen its effect. The sound of the bomb revived the Indian civilisation, which was in an intensive care unit for centuries. This stunned the West and the US in particular. The West respects not the good, but the strong. That is why they respect a blood-stained China.

In India, the Pokharan bomb exploded physically in Rajasthan, but psychologically in North Block, on the Finance Ministry, whose officials panicked.

But soon the nation began finding its feet. India Development Bonds issued to bolster the forex position were oversubscribed by NRIs. Pokharan made them shed their shame in associating with India, which was to them a failed civilisation till then.

Not an economist but an advertising specialist could experience the impact of Pokharan and say that after the Pokharan blast NRIs, who used to abuse India, began admiring India. From then on gradually national self-confidence grew. Jaswant Singh got the respect he deserved from US Deputy Secretary of State Strobe Talbott.

The rise in national spirit reflected in science and business too. Much against global advice, Tatas made the first Indian cars - Indica first, the Indigo next. The Mahindras made the first Indian SUVs, Bolero first, Scorpio next. TVS made the first Indian motorcycle, Victor, and threw out their JV partner. Tisco emerged as the lowest cost steel producer in the world! A hundred similar things began happening. Murasoli Maran could compel the WTO to listen to India. Within the nation small local brands began challenging MNC global brands and emerged successful. A different India emerged. Surprisingly without much of FDI, even less of it!

This completely confounded the Finance Ministers and economists, in India and outside. In fact western economists began finding virtue in India attracting less of FDI as compared to China. They said India does not need, but China needs, FDI! Why? India has entrepreneurs, they said. China, having finished them off earlier, does not have them. So it has to import them by importing FDI.

So, far from more of FDI, less of it too became a virtue. The foreign dependent mindset assiduously cultivated by apologists for India became a matter of the past.

However, the irrational quest for FDI, which began when we had three weeks supply of forex reserves, still persists even after we have an ever-increasing stock of forex reserves now at $ 120 billion, sometimes wondering what to do with it.

Even today, in this budget too, there is apologetic emphasis on FDI. The Finance Minister says FDI is needed for infrastructure. So, in three sectors, FDI limits have been sought to be increased - in telecom to 74 per cent, and insurance and civil aviation to 49 per cent. In all these sectors the Government is the major player: BSNL and MTNL in telecom, LIC and GIC group in insurance, and Air India and Indian Airlines in civil aviation.

Not a single share in these PSUs will be sold to foreigners, given the position that there would be no divestment of PSUs by this government. So it is only private players who will sell their shares. So it is a policy made for private players. Many of them have been working for it furiously. The whole of Delhi knows them.

But they convinced the media that they were not the lobbyists, but those who are trying to prevent them were the ones lobbying! And the media swallowed it. Now the Finance Minister has given in to these lobbies, but under the cover of elegant language and a higher philosophy that the nation needs FDI in the infrastructure sector. Not that the NDA government would have done anything different from what Chidambaram has done. For both are advised by the same lobbies.

We shall see next how FDI will deprive local capital of investment opportunities and keep the forex reserves idle. Also, how such a policy supplies money at cheap rates to the US Government than to Indian business.