1. Planning, the Green Revolution and the 1991 Reforms
After 1947 India followed planned development with a large public sector. Food shortages led to the Green Revolution, and a foreign exchange crisis in 1991 led to major economic reforms known as LPG: liberalisation, privatisation and globalisation.
The Five-Year Plans (1951-2017)
- First Plan (1951-56) focused on agriculture and irrigation. Second Plan (1956-61), based on the P. C. Mahalanobis model, focused on heavy industry.
- The Third Plan (1961-66) fell short because of the 1962 and 1965 wars and droughts; three annual plans followed (1966-69), called a 'plan holiday'.
- The Fifth Plan (1974-79) is linked with the goal of 'Garibi Hatao' (remove poverty); it was ended a year early in 1978.
- The Eighth Plan (1992-97) came after the 1991 reforms. The Twelfth Plan (2012-17) was the last.
- With the Planning Commission replaced by NITI Aayog, Five-Year Plans ended in 2017.
Green, White and other revolutions; bank nationalisation
- The Green Revolution (from the mid-1960s) used high-yielding seed varieties, fertilisers and irrigation, mainly for wheat in Punjab, Haryana and western Uttar Pradesh.
- M. S. Swaminathan is called the father of India's Green Revolution; American scientist Norman Borlaug developed the dwarf wheat varieties.
- Operation Flood (from 1970), led by Verghese Kurien, began the White Revolution; India is now the world's largest milk producer.
- On 19 July 1969, 14 major private banks were nationalised; six more followed on 15 April 1980.
- Supporters said nationalisation spread banking to rural areas and priority sectors; critics later pointed to lower efficiency and political lending.
The 1991 crisis and reforms
- In 1991 India's foreign exchange reserves fell to only a few weeks of imports; gold was pledged abroad to raise funds.
- The government of P. V. Narasimha Rao, with Finance Minister Manmohan Singh, began reforms; the key Budget was presented on 24 July 1991.
- The New Industrial Policy (1991) ended licensing for most industries, opened sectors to private and foreign investment, and reduced the public sector's reserved areas.
- The rupee was devalued, import tariffs were cut and trade was liberalised.
- Supporters credit the reforms with faster growth; critics argued that benefits were unequal and that agriculture was neglected.
Quick facts
- First Plan
- 1951-56, agriculture
- Mahalanobis model
- Second Plan
- Plan holiday
- 1966-69
- Last Plan
- Twelfth, 2012-17
- Green Revolution
- M. S. Swaminathan
- Operation Flood
- Verghese Kurien, 1970
- Bank nationalisation
- 14 banks, 19 July 1969
- Second nationalisation
- 6 banks, 1980
- Reform Budget
- 24 July 1991
💡 For Plans, remember just the famous ones: 1st (agriculture), 2nd (industry, Mahalanobis), 3rd (failure and plan holiday), 12th (last).
📝 5-question quiz on this lesson: enrol free to take it and track your score.
