License Permit Raj - Unitedworld School of Business
THE LICENCE-PERMITRAJ1947 - 1990
A term used to describe regulation of the private sector inIndia between 1947 and the early 1990s. One needed the approval of numerous agencies in orderto set up a business legally. Result of a mixed economy that used a govt. planningcommission established after independence. The license raj was largely successful in the 1950s andafter, but eventually lead to low rates of growth andinvestment. India began to liberalize its economy in the 1980s endingthe license raj.
Scenario Political relations played as aneffective factor in expansion More Expansion in abroad ascompared to India Growing governmental intervention inthe economy
Low enterprise creation New enterprises founded duringLicense-Permit Raj Much fewer enterprise were launchedthan Nehru era. Example- Nirma Group, HindujaBrothers
Structural-Strategic Postures Lack of significant development instructure and strategy Business leaders were depended moreon intuition and gut feeling thanknowledge based understanding of thesituation Invested more in foreign collaborationthan R&D and quality
The FERA, 1973 Intended to restrict the inflow of foreign capital intothe country MNCs were required to dilute their holdings to 40%in their Indian subsidiaries
Public sector Huge increase in PSU than Nehru era. Further expansion in acquiring private firms. Lack of requisite autonomy and constantinterference by the Ministries. Limited success. Creating employment opportunities for thesectors neglected by private firms. Leads to losing the elan of License-Permit raj.