Let’s talk about industrialization and the License Raj. You can read the linked wiki article for a decent overview of what it was.
Before I get into this discussion, let me reiterate a few viewpoints of mine I’ve laid out earlier in the thread: (a) Nehru was completely correct that India had to industrialize rapidly after independence, (b) Nehru chose to pursue a Soviet-ish model of industrialization, because there weren’t that many models of rapid industrialization to choose from, (c) I’m not a fan of this model and (d) India did rapidly industrialize after independence using this model.
Nehru’s big concern was that he wanted the entire chain of industrial production in India. He wanted both heavy and light industry, he wanted raw materials extraction, and he wanted finished product processing for consumers all in India. One top of that, he even wanted the manufacture of factory equipment (that is, the factories that build factories) in India. Again, I’m not a fan of this approach, but if you want to do all of this rapidly, there’s no way to do this without heavy government intervention in the economy.
So, how did the License Raj function? Well, if you wanted to build something (say, cars), you would go to the government to get a license. They would tell you how many units you could produce, how many product lines you could have, who your suppliers had to be, how much you had to pay them, how much you had to pay your employees, who you could sell to, okay, well, this list goes on and on.
A major distinction from the Soviet system, though, is that by-and-large, the factories were never collectivized. They were treated as independent corporations. Some of these corporations were certainly nationalized (the Indian government owned all the stock), but a lot of corporations were left privatized. And there were also a lot of corporations which the Indian government owned partially, but the rest of the stock was owned by the private sector.*
Why am I going through this License Raj discussion? Because Pakistan did not choose the License Raj model to industrialize. They chose a very different model. It’s been a long time since I’ve read about the economic history of Pakistan, so someone else (AK84?) is going to have to supplement this. But, IIRC, they chose a government loan/subsidy model. The Pakistani government set up a bank to make loans to specific industries or they made direct subsidies to private industries. There’s, of course, a certain amount of central decision making in who gets the loans or subsidies, but the industrialized sector was left in private hands far more than under the Indian system.**
How successfull were the Pakistanis in industrializing? Well, I’m not a fan of their model either, but yeah, they were pretty damn successful. Pakistan actually started out worse at independence from an industrialization perspective than India did, and a few decades later, they had a sizeable manufacturing capability.
So, why am I bringing up Pakistan? Well, because now we’ve got two post-independence industrialization models that produced far more industrialization than the British ever did. And the Pakistani model was one that was widely used by a number of Western countries during their industrialization period. Giving out government loans and subsidies to private corporations is a time-honored tradition in the West.
*This collectivization distinction is important, because when it came time to dismantle the License Raj in 1991, the Indians didn’t have to go through a crash privatization scheme, which caused an immense amount of economic pain in countries like Russia. They just basically had to lift a lot of these regulations. And for the companies they either owned outright or partially owned, they could take their time about selling those stocks (and they still haven’t sold a lot of that ownership off in some sectors).
**The Pakistanis did end up nationalizing a lot of the industrial sector starting in the 70s, and since then, there’s been a lot of back-and-forth about how much government involvement there should be in the industrial sector. This does not change my point that their initial industrialization came under a very different model from the Indians.
