Licence Raj in the context of Indian economy

The economy of India is a developing mixed economy with a notable public sector in strategic sectors. It is the world's fourth-largest economy by nominal GDP and the third-largest by purchasing power parity (PPP); on a per capita income basis, India ranked 136th by nominal GDP and 119th by PPP-adjusted GDP. From independence in 1947 until 1991, successive governments followed the Soviet model and promoted protectionist economic policies, with extensive Sovietization, state intervention, demand-side economics, natural resources, bureaucrat-driven enterprises and economic regulation. This was a form of the Licence Raj. The end of the Cold War and an acute balance of payments crisis in 1991 led to the adoption of a broad economic liberalisation in India and indicative planning. India has about 1,900 public sector companies, with the Indian state having complete control and ownership of railways. While the Indian government retains ownership through the National Highways Authority of India (NHAI), a large share of new national highway projects are now built and maintained under Public–private partnership (PPP) models rather than being fully government‑funded. The government plays a major role in sectors like Supercomputing, space and shipping but private participation is growing, especially in space, telecom, and satellite communications.

Nearly 70% of India's GDP is driven by domestic consumption; the country remains the world's third-largest consumer market. Aside from private consumption, India's GDP is also fueled by government spending, investments, and exports. As of 2025, India is the world's 7th-largest importer and the 10th-largest exporter. India is often described as the ‘pharmacy of the world’, supplying roughly 20% of the global demand for generic medicines and exporting pharmaceuticals to over 200 countries in 2023–24, with around 70% of exports to highly regulated markets like North America and Europe. India has been a member of the World Trade Organization since 1 January 1995. It ranks 40th on the Global Competitiveness Index. As of 2025, India ranks third in the world in total number of billionaires. According to the World Bank, India's Gini index fell to 25.5 in 2022‑23, making it the fourth-most equal country globally, suggesting significant progress in income equality. Economists and social scientists often consider India a welfare state. India's overall social welfare spending stood at 8.6% of GDP in 2021-22. With 607 million workers, the Indian labour force is the world's second-largest. Although India's labour productivity is lower than advanced economies, it aligns with levels observed in many emerging Asian countries like China.