Opinion | India's Economic Journey: From Licence Raj To Pragmatic Governance

Updated: Aug 27, 2026 14:15 pm IST Published On Aug 27, 2026 14:15 pm IST Last Updated On Aug 27, 2026 14:15 pm IST

Published On Aug 27, 2026 14:15 pm IST

Last Updated On Aug 27, 2026 14:15 pm IST

There was a thing that only Boomers and Gen X can relate to. It went something like this: if you booked a scooter for your son or daughter at the time of their marriage, you would get the delivery by the time they had two or three children. In the 1980s, the waiting period for a Bajaj Chetak was more than 10 years. At one point, the government had capped Bajaj's annual production capacity at just 80,000 scooters.

That was the era of scarcity. And it was true for so many goods and services like foodgrains, LPG cylinders, telephone connections, cars, music systems, gold, and electrical appliances. One had to stand in queues for many of these things, and smuggling was rampant. The worst part was that much of this scarcity was man-made or, to be precise, government-made.

From production caps to production incentives

Recently, Prime Minister Narendra Modi reminded an audience about what he called the era of Production Linked Punishment (PLP). He explained how the government once fixed production quotas for industries. Companies that produced beyond the permitted limit or the permit could face penalties. He contrasted this with the much-celebrated Production Linked Incentive (PLI) scheme of recent times and the new philosophy of encouraging manufacturing and investment by rewarding production.

In this article, I will not dwell on the numbers or comparative studies between the Nehru era and the post-1991 liberalisation period or the Modi era. The numbers are in the public domain, and much has already been written about them.

Instead, I want to deconstruct the Nehruvian model of Licence-Permit Raj, to understand the economic philosophy and ideology behind it and how it shaped India's economy at that time.

The Nehruvian bet on the........

© NDTV