Fourth Five Year Plan (1969-1974)
Fourth Five Year plan was the first plan launched by Indira Gandhi government amid pressure of drought, devaluation and inflationary recession. The country was fighting with population explosion, increased unemployment, poverty and a shackling economy. In addition, the situation in East Pakistan (now independent Bangladesh) was becoming dire as the Indo-Pakistani War of 1971 and Bangladesh Liberation War took place. Funds earmarked for the industrial development had to be used for the war effort. The result was that this plan period was also no better than the third five year plan.
- India fought yet another war with Pakistan and helped in creation of Bangladesh. Needed to tackle the problem of Bangladeshi refugees after the 1971 war.
- Nationalization of 14 major Indian Banks was a key even during this war. This boosted the confidence of the people in banking system and started greater mobilization of private savings into banking system.
- At the end of this plan, India also performed the Smiling Buddha underground nuclear test in 1974. This test was partially in response to the US deployment of the Seventh Fleet in the Bay of Bengal to warn India against attacking West Pakistan and widening the war. The international community took several harsh measures against India, which affected the domestic economy.
- The Oil Crisis of 1973 skyrocketed the oil and fertilizer prices leading to a very high inflation.
Critical Assessment of Fourth Five Year Plan
The Fourth plan when it was introduced after a gap of three years, was an ambitious plan with an aim of 5.5% growth as the previous plans had a growth target / achievement of maximum 3.5%. But the Indo-Pakistan war, liberation of Bangladesh and problem of Bangladesh refugees , successive failures of monsoon, Asian Oil Crisis of 1973 marred the objectives of this plan. The international economic turmoil due to Oil crisis upset the calculations for Fourth Plan. So only 3.4% growth could be achieved.