Third Plan (1961–1966)

The Third Five-year Plan, stressed agriculture and improvement in the production of wheat, but
the brief Sino-Indian War of 1962 exposed weaknesses in the economy and shifted the focus
towards the defence industry and the Indian Army. In 1965–1966, India fought a War with
Pakistan. There was also a severe drought in 1965. The war led to inflation and the priority was
shifted to price stabilisation. The construction of dams continued. Many cement and fertilizer
plants were also built. Punjab began producing an abundance of wheat.

Many primary schools were started in rural areas. In an effort to bring democracy to the grass-
root level, Panchayat elections were started and the states were given more development
responsibilities.

State electricity boards and state secondary education boards were formed. States were made
responsible for secondary and higher education. State road transportation corporations were
formed and local road building became a state responsibility.

The target growth rate was 5.6%, but the actual growth rate was 2.4%.[6]

Due to miserable failure of the Third Plan the government was forced to declare "plan holidays"
(from 1966–67, 1967–68, and 1968–69). Three annual plans were drawn during this intervening
period. During 1966–67 there was again the problem of drought. Equal priority was given to
agriculture, its allied activities, and industrial sector. The government of India declared
"Devaluation of Rupee" to increase the exports of the country. The main reasons for plan
holidays were the war, lack of resources, and increase in inflation.

India’s Third Five-Year Plan (1961-66)!

In the third plan emphasis was on long-term development.

The third plan report stated that during the five-year period, the Indian economy, “must not only
expand rapidly, but at the same time become self-reliant and self-generating.”

Objectives:

(i) An increase in national income of more than 5% annually. The investment pattern laid down
must be capable of sustaining this growth rate in the subsequent years.

(ii) An increase in the agricultural produce and to achieve self-sufficiency by increasing food-grain
production.
(iii) Expansion of basic industries, the aim being to meet the requirements arising from increased
industrialisation within 10 years by means of available resources.

(iv) Utilising the country’s manpower resource to the maximum and ensuring significant growth in
employment.
(v) Greater equality of opportunities, more even distribution of economic power and reducing wealth and
income disparities.
Outlay:
The total proposed outlay for the Third Plan was Rs. 11,600 crore, of which Rs. 7,500 crore was for the
public sector. The actual public sector outlay was however, Rs. 8,577 crore.
Assessment:
The third plan was a failure in many ways. The plan target was met only in transport, communication and
social service sectors. Otherwise, there was a fall in agricultural production from 82 MT to 72 MT. There
was a considerable rise in prices of food products and consumer articles, Industrial production fell below
expectations.
The causes of the failure included the Chinese aggression against India and the conflict with Pakistan,
poor monsoons in 1964-65 and 1965-66 and lack of co-ordination between central and state governments.
Plan Holiday or Annual Plans:
The period between 1966 and 1969 is sometimes called ‘plan holiday’. This is so because the Indo- Pak
conflict (1965), two successive years of severe drought, devaluation of currency and high levels of
inflation delayed the fourth plan. Instead of a fully fledged five year plan, three Annual plans were
formulated within the draft of the fourth plan.
Objectives:
The main objective of the Annual plans was to remove strains in the economy arising from the sharp-fall
in agricultural production and to curb the inflationary pressure.
Outlay:
Agriculture and irrigation were given the highest priority with 25% of the total investment of Rs. 6,625.4
crore allocated to them, 23% of the total investment was made in the Industrial Sector with the view to
strengthening the industrial base and 18% each in power and transport.

Assessment:

The annual plans helped in uplifting the economy. Agricultural production increased recession
was controlled, strains and stressed on the economy were removed and the pace of development
initiated in the earlier plans were kept up paving the way for starting the Fourth Plan.