During India’s Third Five-Year Plan, which of the following significant events posed major challenges to industrial and trade development?
Show answer & explanation
Correct answer: B
Explanation
Answer: A scarcity of resources caused by major wars and droughts.
Explanation:
India's Third Five-Year Plan (1961–1966) is considered one of the most challenging periods in Indian economic history. The primary reasons behind the failure of this plan and the hindrance to industrial growth were as follows:
Two Major Wars: The India-China War of 1962: This conflict compelled India to shift its development priorities and increase defense expenditure.
The India-Pakistan War of 1965: This war placed further strain on the economy and led to a decline in foreign aid.
Severe Drought (1965–66): The failure of the monsoon rains triggered a grave food grain crisis across the country. The decline in agricultural production resulted in a shortage of raw materials for industries, forcing the government to utilize its foreign exchange reserves to import food grains.
Inflation: Due to the wars and droughts, the prices of essential commodities skyrocketed, leading to a deterioration in the balance of trade.
Owing to these adverse circumstances, the Third Plan failed to achieve its targeted growth rate (5.6%), with the actual growth rate standing at a mere 2.4%. Consequently, instead of launching the Fourth Plan immediately, the government was compelled to declare a 'Plan Holiday' spanning the period from 1966 to 1969.
Additional Key Facts:
Objective: The primary goal of the Third Plan was to transform India into a 'self-reliant' and 'self-generating' economy.
Bokaro Steel Plant: Established in 1964 during this plan period, with technical and financial assistance from the Soviet Union.
Plan Holiday (1966–69): Due to an acute shortage of resources, three 'Annual Plans' were formulated, a period collectively referred to as the 'Plan Holiday.'
Green Revolution: It was the failure of the Third Plan and the ensuing food insecurity that prompted the government to adopt new agricultural technologies (specifically, High-Yielding Variety or HYV seeds), thereby ushering in the Green Revolution.
Potential Questions for Competitive Examinations:
Question: Which of India's Five-Year Plans is considered the 'most unsuccessful'? Answer: The Third Five-Year Plan (1961–66). Its actual growth rate (2.4%) was less than half of the targeted rate (5.6%).
Question: What was the duration of the 'Plan Holiday,' and why was it implemented?
Answer: From 1966 to 1969. Due to a scarcity of resources resulting from the failure of the Third Plan, the Indo-Pak War, and severe droughts, regular Five-Year Plans were suspended, and three annual plans were implemented instead.