The idea for the project emerged in the mid-1970s, and three volumes were planned to cover all Indian literature, including that in native vernaculars.

The work received a positive reception, though a number of critics noted occasional inaccuracies in entries regarding a few of the subjects surveyed in what was otherwise hailed as a landmark in Indian scholarship.

[1] While the compilation of lists of topics was in progress, dissatisfaction with the General Council emerged, and the location of the encyclopaedia unit at Trivandrum was questioned.

In 1978, the Executive Board discontinued its editorial function, and set up a steering committee consisting of Umashankar Joshi as president, Vinayaka Krishna Gokak as vice-president, with K. R. Srinivasa Iyengar, V. Y. Kantak, Vasant Bapat and Vidya Niwas Misra.

Members of the editorial staff were recruited on an ad hoc basis for specific languages or zones and the work was expedited.

It would range over the literary heritage of each of India's 22 major languages, 25 if one regards Pali, Prakrit and Apabhramsa as distinct categories.

The Hindu newspaper, in its 21 July edition, greeted the first book by praising it for exemplary editorial expertise and massive, wide-ranging scholarship.

The reviewer of The Statesman, published on 2 July 1988, thought otherwise: To mention all instances of carelessness, errors of fact, omissions in the work and its entries will require 100 pages and it will be tiresome reading.

[3]In 1990, Vinayak Purohit of the Indian Institute of Social Research, Bombay, appealed to Prime Minister Vishwanath Pratap Singh "to stop the publication of further volumes of this shameful Encyclopaedia"; he cited numerous instances of error of fact, repetition, balance, and other lapses.

The Indian Post subsequently headlined a seven column article: "A Poet Fights for his Reputation" and went on to report "Bengal's most popular poet, Sakti Chattopadhyay, smarting under the inference in the Sahitya Akademi's Encyclopaedia of Indian Literature that his work has been influenced by his alcoholic excesses and sexual escapades, has in an unprecedented move sued the Akademi".

The celebrated Bengali poet is livid that the Sahitya Akademi, the nation's highest literary body, has cast aspersions on his character...".