3. Economic Crisis – 1960s

Despite these significant achievements, India faced a macroeconomic crisis in the mid-1960s, due to the slow growth of agriculture and exports, two successive droughts of 1965 and 1966 and the Indo-Pak War of 1965, followed by a suspension of US aid. This situation delayed the Fourth Plan and three annual plans were adopted between 1966 and 1969. The response of the state to the crisis included:

♤ The adoption of restrictive fiscal policies by cutting down on expenditure

♤ The devaluation of the rupee; and

♤ Launching of the Green Revolution