India’s Development Strategy Prior To 1991

Globalization And Indian Economy of Class 10

  • India followed mixed economy approach
  •  Industries critically important for the economy were retained by the government.
  • Private sector was allowed to operate, but was subjected to control and regulations to prevent concentration of wealth in few hands.
  • Government outlay in public sector enterprises increased from Rs. 81.1 Crore in First Five Year Plan (1950-51) to Rs. 34200 Crore in Ninth Five year Plan (1997-2002).
  • Government's aim was to eliminate poverty, reduce inequality in the distribution of income, and to achieve economic growth with social justice.
  • Most of the government revenue went in the financing Public Sector Enterprises rather than development purposes.


  • A large industrial base was created which helped in industrial development.
  • Problem of unemployment and poverty declined substantially.
  • Self- sufficiency was achieved in food production.
  • Base for export oriented industries was created.
  • We were able to generate our own resources for development.
  •  A large pool of scientists and technically skilled persons was created.


  • Industrialization did not take place as expected.
  •  Industrial growth rate declined to 4% ( 1965-80) from 8% (1950-65).
  • Corruption, lack of efficiency in work and ineffective, management became common features in Public Sector Enterprises.
  • Government invested Rs.18207 Crore in 1980-81 in central public sector enterprises but incurred losses of Rs.203 Crore.
  • Government failed to reduce concentration of economic power in few hands in private sector.


  • Rising prices, shortage of adequate capital, slow economic development and technological backwardness.
  • Borrowings from abroad increased to such a level that we were finding difficulty in paying even the interests, there was nothing left to pay for the imports.
  • Indian government was forced to borrow more money from International Banks.
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