Licence Raj - Current Status

Current Status

The License Raj-system was in place for four decades. The government of India initiated a liberalization policy under the Prime Ministership of Rajiv Gandhi, though much of the actual progress was made under P.V.Narasimha Rao. Narasimha Rao also had the responsibility of industries minister and he is directly responsible for dismantling the License Raj. Liberalization resulted in substantial growth in the Indian economy, which continues today The Licence Raj is considered to have been significantly reduced in 1991 when India had only two weeks of dollars left: "In return for an IMF bailout, Gold bullion was transferred to London as collateral, the Rupee devalued and economic reforms were forced upon India." The federal government, with Dr Manmohan Singh as finance minister, reduced licensing regulations; lowered tariffs, duties and taxes; and opened up to international trade and investment. The reform policies introduced in after 1991 removed many of these restrictions. Industrial licensing was abolished for almost all product categories but alcohol, tobacco, hazardous chemicals, industrials explosives, electronics, aerospace and pharmaceuticals. The only industries which are now reserved for public sector are defence equipment, atomic energy generation and railway transport. In many industries, the market has been allowed to determine the prices.