Question

What was the major economic challenge addressed in the Third Five-Year Plan (1961-1966)?

• A. Liberalisation of the economy
• B. Introduction of the service sector
• C. Focus on digital technology advancement
• D. War-time expenditure and resource allocation

Answer 1

Answer:

D. War-time expenditure and resource allocation

Third Five-Year Plan (1961-1966) and Economic Challenges

The Third Five-Year Plan in India (1961-1966) faced significant economic challenges, primarily due to war-time expenditure and the subsequent impact on resource allocation.

• Background: Following two successful Five-Year Plans that focused on establishing a self-reliant economy and industrial base, the Third Plan aimed at accelerating the pace of economic development.
• Sino-Indian War (1962): A major disruption was the war with China in 1962. This conflict necessitated a substantial increase in defense spending, diverting crucial resources that were originally earmarked for developmental projects.
• Indo-Pakistani War (1965): Another conflict, the war with Pakistan in 1965, further strained the Indian economy. Both wars led to increased government expenditure and a considerable drain on national resources.
• Impact on Resource Allocation: The increased defense expenditure significantly impacted the planned allocation of financial and material resources for industrial growth, agricultural development, and infrastructure projects. This led to a slowdown in the planned targets.
• Economic Slowdown: The combined effect of these wars and the resultant resource crunch contributed to an economic slowdown in the later years of the plan, which also led to the 'plan holiday' for the subsequent three years.
• Focus Shift: The emphasis shifted from rapid industrialization towards strengthening national defense and achieving self-sufficiency in food grains, although agricultural growth targets were also affected by other factors like drought.