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.
POSITIVE ASPECTS:
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.
NEGATIVE ASPECTS:
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.
CONDITIONS WHICH LED TO REFORMS IN INDIAN ECONOMY:
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.
