Tackling Economic Problems

In the mid-sixties, Indian economy was going through a crisis. There were shortage of food grains, a huge fiscal deficit, and a deterioration in the balance of payments situation. This led to a greater dependence on foreign aid. The war with Pakistan in 1965 resulted in the suspension of food aid from the US which refused to renew the PL-480 agreement. In the circumstances, five-year planning was suspended in favour of annual plans (between 1966 and 1969).

Inflation remained high except during the Emergency.

Unemployment too was a grave problem.