Question

What was the primary reason for the 'Plan Holiday' between 1966 and 1969?

• A. Political instability
• B. Failure of the Third Five-Year Plan
• C. Deflation
• D. Economic liberalisation

Answer 1

Answer:

B. Failure of the Third Five-Year Plan

The Period of Plan Holiday (1966-1969)

The period from 1966 to 1969 in India is known as the 'Plan Holiday'. This was a deviation from the usual Five-Year Plan structure.

Primary Reason: Failure of the Third Five-Year Plan

• The Third Five-Year Plan (1961-1966) faced severe setbacks, leading to its inability to achieve its set targets.

• Key Factors Contributing to the Failure:

  • Indo-Pakistani War of 1965: This conflict strained national resources and diverted focus from developmental goals.

  • The Sino-Indian War of 1962: This war also had significant economic consequences, impacting defense spending and resource allocation.

  • Severe Droughts: Consecutive years of drought in the mid-1960s crippled agricultural production, a critical sector of the Indian economy.

• The cumulative impact of these crises led to a general economic slowdown and uncertainty.

Rationale for the Plan Holiday

• The government decided to postpone the Fourth Five-Year Plan due to the prevailing economic instability and the need to reassess priorities.

• Instead of a formal Five-Year Plan, the government opted for annual plans during this period.

• This strategy allowed for flexibility in resource allocation and planning in response to the uncertain economic conditions.

• The objective was to stabilize the economy, consolidate gains from previous plans, and lay a sound foundation for future development efforts.