Stagnation in India (1965 To 1980) Was Due To Sharp Reductions in Essay

Stagnation in India (1965 To 1980) Was Due To Sharp Reductions in Public Investments in the Mid-1960s - Essay Example The period of mid-1960s as well as early 1970s has been found to be facing numerous economic problems. The reasons behind such problems stemmed from the fact that since India faced wars with its neighboring countries, huge amount of resources were spend towards defense which reduced the amount of public investment, thus significantly affecting the growth of India. The other reason behind the stagnation was the issues related to foreign exchange situation that forced the country to devalue its currency in the year 1966. The production of the food was insufficient because of the rising demand and therefore it became necessary for India to import the food items from other countries (FAO, â€Å"India†). It was observed that there was decline in the growth rate of public investment which can be identified as one of the significant factors in the decline of the industrial growth rate after the mid-1960s. The paper tries to identify the state of economy of India during the period of 1965-1980. It will review the impacts of low public investment in the mid-1960s on India and the steps taken by the political leaders to combat the problems (Sridharan, E., â€Å"The Political Economy Of Industrial Promotion: Indian, Brazilian, And Korean Electronics In Comparative Perspective 1969-1994†). Indian Economy since Independence and During the Period of Stagnation The main question that arises is related to the performance of India since 1947, the year of its independence. It has been believed that the economy of India was stuck from the times of independence; during that period ‘Hindu rate of growth’ was nearly 3.5% per annum. The period of seventies was commonly referred to as ‘Hindu rate of growth period’. It was revealed that the reason behind the decline in the gross domestic product (GDP) growth during the period of sixties have been due to sharp decline in the growth of agriculture from the middle of sixties. After Green Revolution was introduced, there were important changes in the growth possibility of agriculture. During the period of 1965-1980, the policies were generated as a result of immediate crisis in the economy of India as well as political suitability rather than by economic logic. It has been observed that this period saw disconnectedness in the policies and the procedures of the government. It was found that various strategies adopted by the country for the purpose of the development of the nation failed miserably before the reforms of the nineties. The three components such as too much controls and inward-looking policies as well as substantial and inefficient public sector suppressed the growth during the seventies and to a certain extent in the eighties as well (Virmani, â€Å"India’s Economic Growth: From Socialist Rate of Growth to Bharatiya Rate of Growth†). The decline in the growth rate of industries in the economy of India during the sixties has been characterized as provis ional downward deviation in relation to trend. However, in the present times, the scenarios are being reflected as long-run tendencies leading to stagnation