Ideas of India Rakesh Mohan Reflects on Dismantling the License Permit Raj
Jun 20, 2025
In this conversation, Rakesh Mohan, a prominent economist and former Deputy Governor of the Reserve Bank of India, shares insights from his extensive experience with India’s economic reforms. He discusses the challenges and complexities of dismantling the License Permit Raj and its impact on growth since the 1991 reforms. Mohan also delves into the historical context of India’s industrial regulations and emphasizes the structural transformations still needed to bolster the economy. His reflections on urbanization and infrastructure highlight the ongoing journey towards a more efficient system.
AI Snips
Chapters
Transcript
Episode notes
Complex Origins of License Raj
- India's License Permit Raj was a complex, interconnected system of controls over industry, imports, pricing, and foreign exchange.
- These controls originated during WWII and were rooted in the British colonial civil service's control-oriented administration.
Intricate Permitting System Explained
- The License Raj required multiple permissions for industry setup, including licenses for technology, imports, capital, and monopoly control.
- This tightly controlled system aimed to support import substitution and industrial growth despite its inefficiencies.
Pervasive Price Controls Impact
- Price controls permeated the economy, controlling key goods like cement, steel, sugar, and drugs.
- Although intended to keep essentials affordable, these controls contributed to pervasive shortages and inefficiencies.