Anticipating the Unintended #26: License Permit Raj, Prisoner’s Dilemma, Multilateralism, and more

This newsletter is really a weekly public policy thought-letter. While excellent newsletters on specific themes within public policy already exist, this thought-letter is about frameworks, mental models, and key ideas that will hopefully help you think about any public policy problem in imaginative ways. It seeks to answer just one question: how do I think about a particular public policy problem/solution?

Lights, Camera, (Policy Precedes) Action: License Permit Raj

Public Policy via Bollywood

— Raghu Sanjaylal Jaitley

(2-min read)

There are many Rajs in Shyam Benegal’s criminally underrated Kalyug (1981), a modern adaptation of Mahabharat set in the Mumbai corporate world of the late 70s. There’s a detached Raj Babbar as Dharam Raj (Yudhisthira) with a weakness for racehorses, a pugnacious Kulbhushan Kharbanda as Bal Raj (Bhima), the delightful Anant Nag as Bharat Raj (Arjuna) and, a seething but understated Victor Banerjee as Dhan Raj (Duryodhana).

But the real scene-stealer on whose machinations the story pivots is a different Raj.

It is the License Permit Raj.

Losing out on a license kicks off a trail of internecine strife that consumes everyone in Kalyug. It turns out to be the most powerful Raj of them all.

For those who came in late, you only need to know this. License Permit Raj at times made Indians long for British Raj. It was that good. We got into this Raj because of our touching belief in central planning (Mahalanobis model) and in the salient role of government and state-run enterprises (“commanding heights of the economy”) in driving economic growth in the country. The government became so obsessed with controlling the private sector that it sat on judgment on everything – what to produce, how much to produce and what price to offer to customers. A license or a permit from the government became the single biggest competitive strength. The path to growth for an enterprise wasn’t scaled because there were quotas on how much you could produce, but diversification through new licenses and permits in unrelated sectors.

Read the full edition here.