The Investor's Shelf — one book
India Unbound

India Unbound

Gurcharan Das
2000
T2 420 pages · about 7h to read OL1075254Wgoodreads

A Procter & Gamble insider on the 1991 liberalisation and what preceded it.

Summary

Gurcharan Das ran Procter and Gamble India and wrote this history of the Indian economy from independence to 2000, interleaving national policy with his own career. The structure moves through three periods: the Nehruvian planning years, the tightening controls of the 1960s and 1970s, and the liberalisation that began in 1991 under Narasimha Rao and Manmohan Singh.

Das's argument is that India's licence raj suppressed growth not primarily through public ownership but through the permit system governing private firms. He gives concrete detail from his own experience: the time required to obtain approval to expand capacity, the incentive to lobby rather than to compete, the protection of incumbents against entry, and the quality consequences of guaranteed markets. He contrasts this with the post-1991 period, when import liberalisation and the removal of industrial licensing exposed Indian firms to competition and, in his account, revealed entrepreneurial capacity that had been present all along.

The book is optimistic in a way that the subsequent twenty-five years have partly justified and partly not; India's growth accelerated, but the manufacturing employment Das expected did not materialise, and the reform agenda stalled in land, labour and financial markets. Das is also writing from a business perspective and gives limited attention to agricultural policy, to the distributional record, or to the argument that early state investment in heavy industry and technical education created capabilities the later boom used. It remains the most readable single-volume account of what the licence system did to firms.

Key takeaways 7

  1. The licence system damaged Indian growth chiefly by restricting private firms, not by expanding state ownership.
  2. Guaranteed domestic markets removed any incentive for Indian manufacturers to improve product quality.
  3. Firms under the permit regime competed for regulatory approvals rather than for customers, which shaped an entire generation of management.
  4. Das argues that Indian entrepreneurial capability existed throughout the planning period and was suppressed rather than absent.
  5. The 1991 reforms succeeded because a balance-of-payments crisis removed the political veto that had blocked them for a decade.
  6. India's growth came disproportionately from services because manufacturing remained constrained by labour law and infrastructure.
  7. Das claims India will grow at night while the government sleeps, meaning that private activity advances despite rather than because of the state.

Who should read it

Investors and operators working in India who want the history of the regulatory regime that still shapes how Indian firms and officials behave.

Where it sits in the reference 2

Countries
Philosophy

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