Licence Raj

It kickstarted what is now known as the economic liberalization of India.

India's first prime minister since the crisis was Narasimha Rao, and one of the most important things he did was get rid of Licence Raj.

Licence Raj was a set of regulations that had been in place since the '50s that made it really difficult for businesses to obtain the licenses they needed to operate.

Removing these licenses profoundly improved India's economic activity, and since then, India has been an economic machine, with GDP increasing from 266 billion in 1991 to over 3.5 trillion today.

But let's step back for a second.

Emergency was one of her minor flaws.

Political interference through License Raj was made fashionable by her.

R.K. Dhawan was the gatekeeper of all licenses in India until 1991 when liberalization was brought in because we were forced to do it.

Otherwise, we were defaulting with the IMF.

If the 1950s were a period of hope and ambition and building, it was followed by the 1960s, which had food shortages, multiple wars, one with China in 1962 and then with Pakistan in 1965, and trade deficits and increasingly socialist policies by the government.

All of this was leading to the government wanting to control more and more aspects of the Indian economy, which eventually we now come to know as the License Raj.

By 1972, markets had slowed down under these conditions and TCS was just not finding enough business to survive.

FC Kohli actually starts looking out for opportunities beyond India.

600,000.

So that's $300,000 for the computer itself, plus another $300,000 for the duty, plus TCS is forced to commit 600,000, double the amount as export revenue.

This is because the Indian government is now in the License Raj era and it wants to preserve foreign exchange.

So in order to import something, you have to commit that you will export 2x that value.

Hmm.

To top this off, India effectively nationalized most of its major industries in the mid-1950s and onwards, and its biggest trading partner at the time was the Soviet Union, and it had typical Soviet-esque style laws around pretty much everything, called the License Raj, which was pretty much just a big book of bureaucratic red tape for anybody that wanted to do anything in the economy.

So India was a communist country? Well, no.

It had a lot of the central planning characteristics of a communist nation, and it traded with communist nations, but it-

Its once government-run industries have been privatized.

Its very, very strict trade policies have been relaxed.

The country has opened itself up to business from around the world, and the extremely limiting license raj, that book of bureaucratic red tape that had rules about everything, has since been thrown in the wood chipper.

This was followed by an explosion in growth within the economy of India.