India 1960-1970, Learn History by Inter- Linking For UPSC IAS

India 1960-1970, Learn History by Inter- Linking For UPSC IAS

India 1960-1970, Learn History by Inter- Linking For UPSC IAS. The Political Scenario of India in the 1960s

The study starts with the opening scene of India’s political scenario during the early 1960s.

Formation of Swatantra Party:

The political journey was not an easy ride for the nascent Indian democracy. Congress was ruling as the major voice of diverse India and till the second general elections, no major party was seen to emerge as a major opposition to Congress until the formation of Swantatra Party in 1959.

It can be considered as the first major liberal party of independent India that rose to prominence. It was formed on 4 June 1959, shortly after the Nagpur session of the Indian National Congress, C. Rajagopalachari, along with Murari Vaidya and Minoo Masani, a classical liberal and critic of socialist Nehru.

Till the rise of Swatantra Party, right-wing groups and parties had existed earlier at the local and regional levels only. Swatantra’s formation, however, was the first attempt to bring these highly fragmented right-wing forces together under the umbrella of a single party. The provocation for the formation of such a party was the left turn which the Congress took at Avadi (the Congress party itself adopted a resolution to establish a ‘socialistic pattern of society’ in its Avadi session as early as in 1955 and took measures accordingly.) and Nagpur sessions.

As Swatantra stood for a market-based economy with the “Licence Raj” dismantled, they formed a major voice against the socialist functioning of the then government. It was founded on the conviction that social justice and welfare can be attained through the fostering of individual interest and individual enterprise in all fields better than through State ownership and Government control.

By the next general election in 1967, Swatantra had become a significant force in some parts of India; it won 8.7%of votes and became the single largest opposition party in the 4th Lok Sabha (1967-1971) helping to balance the parliamentary democracy.

Transfer and annexation of land between India and other foreign countries

The transfer of lands after the partition and inclusion of many foreign territories into India had not yet been done with. In 1960 we face an issue regarding the cessation of Beru-bari union.

Beru-Bari Union Case

We know that India and Pakistan boundary was fixed by Sir Radcliffe and the line was called Radcliffe Line. However, some disputes arose because of the erroneous depiction of the maps by the Radcliffe Award. One of such disputes was Berubari Dispute. Radcliffe had divided the district of Jalpaigudi between India and Pakistan by awarding some thanas to one country and others to the other country. The boundary line was determined based on the boundaries of the thanas. In describing this boundary, Radcliffe omitted to mention one Thana. Berubari Union No. 12 lies within Jalpaigudi thana which was awarded to India. However, the omission of the Thana Boda and the erroneous depiction on the map enabled Pakistan to claim that a part of Berubari belonged to it. This dispute was resolved by Nehru-Noon Agreement of 1958, whereby half of Berubari Union No. 12 was to be given to Pakistan and the other half adjacent to India was to be retained by India. In addition, four Cooch Behar enclaves contiguous of this part would also have gone to Pakistan.

Now the question arose, regarding the power of the parliament to transfer the territory of Berubari to Pakistan. This is where we come to learn about the Beru-Bari union case of 1960. And also, the famous 9th Constitutional Amendment Act. The matter whether parliament has the power to cede a region to a foreign country was brought to the supreme court. It declared that cessation to a foreign country would require special constitutional amendment procedures under Article 368 than the otherwise mentioned simple constitutional procedure mentioned in Article 4.

Yet another internal struggle that India had to face was regarding the inclusion of regions which were still under the foreign power. India 1960-1970, Learn History by Inter- Linking For UPSC IAS

Dadra and Nagar Haveli

The Portuguese ruled this territory until its liberation in 1954. Subsequently, the administration was carried on till 1961 by an administrator chosen by the people themselves. It was converted into a union territory of India by the 10th Constitutional Amendment Act, 1961.

Annexation of Goa

In 1961, after continual petitions for a peaceful handover, India invaded and annexed the Portuguese colony of Goa on the west coast. India acquired the three territories of Goa, Daman& Diu and formed them into a union territory.

Indo-China War (1962)

While integration and cessation of territories were going on one side, on the other side there were other major issues erupting to be faced by India. we had discussed the Tibetan uprising and fleeing of Dalai Lama as one of the triggers for Indo-China war. Well, the year had finally come when things between us and China were to get worse. But before getting into that let us look into the actual matters leading to Indo-China War.

The battle was over the disputed borderland areas of Aksai chin and Arunanchal Pradesh. India claimed Aksai Chin to be a part of Ladakh (it is a huge desert of a salt flat which has been under Chinese occupation since the 1950s). Though not demarcated, these borders were well defined by various treaties and usage right from the seventeenth century. Yet another sign of discord between India and China was the invasion of Tibet by China. The Tibetans looked up to India for help but India’s feeble protest (considering our Panchsheel Policy) merely antagonised the Chinese without helping the Tibetans. On the contrary, China illegally occupied the Aksai Chin and completed construction of its Western Highway through it in 1957.

To counter continued Chinese aggression, India embarked on a policy, called ‘Forward Policy’, of establishing a series of small posts all along its Northern and Eastern borders with China, to prevent further incursions. However, most posts were not capable of giving a fight to the Chinese and were logistically unsustainable.

In 1962 China’s People’s Liberation Army invades India in Ladakh, and across the McMahon Line in the then North-East Frontier Agency (now Arunachal Pradesh), inflicting heavy damage on Indian forces.

On 10th October The Sino-Indian War, a border dispute involving two of the world’s largest nations (between India and the People’s Republic of China) begins.

On 20th October Chinese troops invade Kashmir and capture Aksai Chin. India 1960-1970, Learn History by Inter- Linking For UPSC IAS

World affairs

While India and China were busy fighting each other, serious intervention of soviet and the US in this matter was halted because of another major event happening simultaneously in the timeline which was the Cuban Missile Crisis.

But before we start to discuss the Cuban missile crisis, let us quickly go through a few world events in the past that needs mentioning here to connect to things upcoming. One of such events was the Suez Crisis.

Suez Crisis

The Suez Crisis began on October 29, 1956, when Israeli armed forces pushed into Egypt toward the Suez Canal after Egyptian president Gamal Abdel Nasser (1918-70) nationalized the canal, a valuable waterway that controlled two-thirds of the oil used by Europe. The Israelis were soon joined by French and British forces. At the same time, the Soviets, eager to exploit Arab nationalism and gain a foothold in the Middle East, supplied arms from Czechoslovakia to the Egyptian government beginning in 1955 and eventually helped Egypt construct the Aswan Dam on the Nile River after the United States refused to support the project.  This nearly brought the Soviet Union into the conflict and damaged their relationships with the United States. In the end, Egypt emerged victoriously, and the British, French and Israeli governments withdrew their troops in late 1956 and early 1957. The event was a pivotal event among Cold War superpowers.

In the aftermath of the Suez Crisis, Britain and France, once the seat of empires, found their influence as world powers weakened as the United States and the Soviet Union took a more powerful role in world affairs. British Prime Minister Anthony Eden resigned two months after withdrawing British troops

The crisis made Nasser a powerful hero in the growing Arab and Egyptian nationalist movements. Israel, while it did not gain the right to utilize the canal, was once again granted rights to ship goods along the Straits of Tiran.

Ten years later, Egypt shut down the canal following the Six-Day War (June 1967 to be discussed in the following section). For almost a decade, the Suez Canal became the front line between the Israeli and Egyptian armies. India 1960-1970, Learn History by Inter- Linking For UPSC IAS

International India

  • India too had voiced its opinion during this crisis. In 1956, when the Suez Canal Company was seized by the Egyptian government, an international conference voted 18–4 to take action against Egypt. India was one of the four backers of Egypt, along with Indonesia, Sri Lanka, and the USSR.
  • India had opposed the partition of Palestine and the 1956 invasion of the Sinai by Israel, the United Kingdom and France, but did not oppose the pro-democracy movement in Hungary by the Soviet Union.
  • India’s prominent stand on various international events brought it under the limelight as the voice of the emerging voice of the third world countries. Which reminds us of an important contribution that India and other emerging countries had for the world divided into two blocs. i.e. NAM.

Non-Aligned Movement

  • Drawing on the principles agreed at the Bandung Conference in 1955, the NAM was established in 1961 in Belgrade, SR Serbia, Yugoslavia through an initiative of the Indian Prime Minister Jawaharlal Nehru, Egyptian President Gamal Abdel Nasser and the Yugoslav president Josip Broz Tito. It showcased the stand of these countries regarding their neutral stand and willingness to keep away from super-bloc politics and alignments.
  • The term non-aligned movement first appears in the fifth conference in 1976, where participating countries are denoted as “members of the movement”.
  • The purpose of the organization was to ensure “the national independence, sovereignty, territorial integrity and security of non-aligned countries” in their “struggle against imperialism, colonialism, neo-colonialism, racism, and all forms of foreign aggression, occupation, domination, interference or hegemony as well as against great power and bloc politics

Cuban Missile Crisis of 1962

Meanwhile, NAM was speaking about the spirit of keeping neutral the two main power blocs were busy in the Cuban missile crisis.

  • After seizing power in the Caribbean island nation of Cuba in 1959, leftist revolutionary leader Fidel Castro (1926-2016) aligned himself with the Soviet Union. Under Castro, Cuba grew dependent on the Soviets for military and economic aid. During this time, the U.S. and the Soviets (and their respective allies) were engaged in the Cold War (1945-91), an ongoing series of largely political and economic clashes. The two superpowers plunged into one of their biggest Cold War confrontations after an American pilot photographed a Soviet SS-4 medium-range ballistic missile being assembled for installation in Cuba. They took this as an alarming situation for nuclear missiles were being installed too close to the US, leading to a crisis and stand-off.

Back to India

So, let’s come back to the point where we had left. While we were discussing Indo-China war another side by side happening was the incorporation of Pondicherry into India (officially).

  • Till 1962 the territory of Pondicherry was administered as an ‘acquired territory’ and was made a union territory by the 14th Constitutional Amendment Act. The territory of Puducherry comprising the former French establishments in India known as Puducherry, Karaikal, Mahe and Yanam was handed over to India in 1954. However, their official incorporation happened only in 1962.
  • In 1963 (13th Constitutional Amendment Act), the Naga Hills district became the 16th state of India under the name of Nagaland. Part of Tuensang was added to Nagaland. Nagaland became a state on 1 December 1963.

The economic situation in India

  • The introduction of modern production techniques, which require proportionately greater capital, was the main feature of the development of the Indian economy during the decade, 1950-60. However, this modern sector had not yet become large enough to affect the overall structure of the economy.
  • Largescale manufacturing industry was the only sector of the economy to adopt advanced modern techniques to a marked extent to affect the capital structure of the sector as a whole. In other sectors, despite there being a rise in the incremental capital-output ratios, the overall capital-output structure remained largely unchanged.
  • The quest to quickly industrialize had caused a large reallocation of funds away from the farm sector.
  • Agriculture outlay was nearly halved to 14% in the Second Plan. Food shortages worsened, and inflation spiked. Imports of food grains depleted precious foreign exchange reserves.
  • Beginning in 1950, India had faced trade deficits that increased in the 1960s. The Government of India had a major budget deficit and therefore could not borrow money internationally or privately.
  • As a result, the government issued bonds to the Reserve Bank of India, which increased the money supply, leading to inflation.
  • The war with China had exposed India’s economic weakness. Chronic food shortages and price rise convinced him that India needed to move away from centralized planning and price controls.

This was a huge pressure to handle for a nascent economy emerging out of colonial deprivations. India 1960-1970, Learn History by Inter- Linking For UPSC IAS

Institutional and legislative advancements in the 1960s

Meanwhile, we discuss the Indian economic scenario after the war, many institutional and important legislative developments had happened on the way.

Before we move on to specific legislative details of the 1960s let us quickly go through a few important legislations of 1950s that we missed in the previous video.

  • the establishment of Khadi and Village Industries Commission Act, 1956 – It is an apex organisation under the Ministry of Micro, Small and Medium Enterprises, concerning khadi and village industries within India, which seeks to – “plan, promote, facilitate, organise and assist in the establishment and development of khadi and village industries in the rural areas in coordination with other agencies engaged in rural development wherever necessary
  • Mines and Minerals (Development and Regulation) Act, 1957– The Mines and Minerals (Regulation and Development) Act (1957) is an Act of the Parliament of India enacted to regulate the mining sector in India. It was amended in 2015 and 2016. This act applies to all mineral except minor minerals and atomic minerals. It details the process and conditions for acquiring a mining or prospecting licence in India. Mining minor minerals come under the purview of state governments.
  • Armed Forces (Special Powers) Act, 1958– to grant special powers to the Indian Armed Forces the power to maintain public order in “disturbed areas”.
  • The new idea of bringing justice not just to humans but also animals was mentioned via the prevention of cruelty act, 1960
  • Welfare measure via maternity benefit Act, 1961– protects the employment of women during the time of her maternity and entitles her of a ‘maternity benefit’ – i.e. full paid absence from work – to take care for her child. The act applies to all establishments employing 10 or more employees. Recently major amendments were introduced into this act like increasing the maternity leave to 26 weeks, providing work from home options, creche facility for institutions employing more than 50 employees and compulsory education about maternity benefits.
  • IIT Act, 1961:In order to drive India’s economic development and to build industry, the idea for India to have scientists and engineers was considered important. It was recommended to create higher technical institutions, based on the Massachusetts Institute of Technology model, following which five institutes of technology (IIT) were established at Kharagpur (1950), Bombay (1958, with assistance from UNESCO and the Soviet Union), Kanpur (1959, with a consortium of US universities), Madras (1959, with the government of West Germany) and Delhi (1961, with the UK). Later, the IIT Act was enacted on 19 December 1961 to “declare certain institutions of technology to be institutions of national importance. The list also includes NITs and AIIMS, in addition to the IITs. The Institute of technology Act, 1961 was passed.
  • 1963: the establishment of CBI
  • India 1960-1970, Learn History by Inter- Linking For UPSC IAS

Political scenario in India (after Nehru)

1964: Jawaharlal Nehru died on 27 May 1964.

Lal Bahadur Shastri succeeded Nehru as Prime Minister. Soon after his taking over of prime ministership, he had to face another major trouble of 2nd Indo-Pak War.

1965: 2nd Indo-Pak war

  • The Indo-Pakistani War of 1965 was a culmination of skirmishes that took place between April 1965 and September 1965 between Pakistan and India.
  • The conflict began following Pakistan’s Operation Gibraltar, which was designed to infiltrate forces into Jammu and Kashmir to precipitate an insurgency against Indian rule.
  • India retaliated by launching a full-scale military attack on West Pakistan.
  • Hostilities between the two countries ended after a United Nations-mandated ceasefire was declared following diplomatic intervention by the Soviet Union and the United States, and the subsequent issuance of the Tashkent Declaration.
  • Much of the war was fought by the countries’ land forces in Kashmir and along the border between India and Pakistan. India 1960-1970, Learn History by Inter- Linking For UPSC IAS

The economic and social side

  • By the time Shastri took over as PM, the failure of the third Five-Year Plan was clear.
  • Growth in national income barely kept pace with population growth, the prices rose substantially, and food grain became scarce.
  • He tried to lower the role of Planning Commission whose five-year plans and involvements in the Indian economy was not paying better results than expected.
  • Considering the economic stagnation that India was in Shastri wanted to promote agrarian growth in contrast to the earlier focus on heavy industries.
  • It was him who brought the technocrat minister Subramaniam to obtain suggestions for improving current stagnant scenario. Subramaniam emphasised on promoting the private sector, technological innovation, and foreign investment amidst a hostile leftist consensus.
  • Subramaniam proposed the market-oriented approach to increase production and also favoured use of chemical fertilizers. Based on his intervention the Food Corporation of India Act was passed in 1964.
  • There was a shift from social to technological reform in agriculture.
  • After the 1965 India-Pakistan war, Subramaniam came up with a three-pronged plan to improve the agrarian economy. He advocated the use of High Yielding Variety seeds, price incentives to farmers and focused use of improved farming inputs into irrigated areas and this ultimately led to the green revolution in India.
  • Soon after the war, which ended with the Tashkent Agreement in 1966, huge efforts were laid to restore the falling economic parameters.
  • After the war, a shaky economy forced annual plans in place of the five-year plan. India suspended five-year plans briefly, drawing up annual plans between 1966 and 1969 instead. This was done as the country was not in a position to commit resources over a longer period.
  • The war with China, the below-par growth outcomes of the third Plan, and the diversion of capital to finance the war with Pakistan had left the economy severely weakened. India 1960-1970, Learn History by Inter- Linking For UPSC IAS

World: Major Happenings in the 1960s

The beginning of the next decade was marked with a great number of civil rights and human rights protests and movements at a bigger scale.


  • Beginning of Anti-apartheid movement in the UK, against the discrimination policy of South Africa.
  • Civil Rights Movement in the US:
    • The civil rights movement was the first of the 1960s-era social movements. This movement produced one of the most important American social activists of the 20th century, Martin Luther King, Jr.
    • It originated among black Americans in the South who faced racial discrimination and segregation, or the separation of whites and blacks, in almost every aspect of their lives.
    •  In 1960 black Southerners often had to sit in the back of public buses, were refused service in most restaurants and hotels, and still went to racially segregated schools, despite the 1954 Supreme Court ruling, Brown v. Board of Education, which outlawed racially segregated education. Employment ads were separated into “Negro” and “white” categories, and black Southerners were openly restricted to the lowest paying and lowest status occupations. Besides, most black Southerners were effectively denied the right to vote.
    • Blacks fought in the courts, lobbied elected officials, and began a sustained campaign of nonviolent direct action. Many blacks participated in major demonstrations.
    • In 1964, pressured by the civil rights movement and under the leadership of President Lyndon Johnson, Congress passed the Civil Rights Act of 1964, which prohibited segregation in public accommodations and made discrimination in education and employment illegal. In 1965 Congress passed the Voting Rights Act, which suspended the use of any voter qualification devices that prevented blacks from voting.

This is very important to remember considering the current escalation of black rights violation and demand for upholding human rights even now in this century where everyone believes that we have done away with old hard customs and practices. India 1960-1970, Learn History by Inter- Linking For UPSC IAS


  • Establishment of the World Food Programme: The world after world war II had yet to emerge from severe hunger and food shortage all across the globe. It was in 1961 that the first world food programme was launched. is the food-assistance branch of the United Nations and the world’s largest humanitarian organization addressing hunger and promoting food security. WFP was established in 1961 after the 1960 Food and Agriculture Organization (FAO) Conference and formally came into force in 1963. The WFP strives to eradicate hunger and malnutrition, with the ultimate goal in mind of eliminating the need for food aid itself.


  • UN passes UN Resolution 1761 condemning apartheid.
  • Increased US presence and involvement in Vietnam
    • The Vietnam War was a long, costly and divisive conflict that pitted the communist government of North Vietnam against South Vietnam and its principal ally, the United States. The Vietnam War and active U.S. involvement in the war began in 1954, though ongoing conflict in the region had stretched back several decades. In 1954, after the battle of Dien Bien Phu (where the communist north won), at the Geneva Conference Vietnam was splitted along the 17th parallel as North and south Vietnam. However, by 1960 many opponents (both communist and non-communist) rose in South Vietnam, opposing the current system. From 1961 onwards America started buildingup its military, technical and economic aid to suppress such a threat against the US favoured ally Diem in S. Vietnam. Soon after a coup rose in South and Diem was executed. The US soon retaliated with bombing raids across N. Vietnam (codenamed Operation Rolling Thunder). This bombing was not just limited to Vietnam but it bombed the neutral state of Laos too. By 1965, US combats were sent to Vietnam.
    • By 1966, large areas of South Vietnam had been designated as “free-fire zones,” from which all innocent civilians were supposed to have evacuated and only enemy remained. In all of this, a huge number of civilian lives were lost.
    • This also resulted in a major protest led mostly by students against the US intervention in Vietnam. the student movement worked primarily to fight racism and poverty, increase student rights, and to end the Vietnam War. India 1960-1970, Learn History by Inter- Linking For UPSC IAS


  • In China: While this was happening in the US and SE Asia, in China under Mao Zedong another major cultural revolution was taking place. The Cultural Revolution was launched in China in 1966 by Communist leader Mao Zedong in order to reassert his authority over the Chinese government. Mao called on the nation’s youth to purge the “impure” elements of Chinese society and revive the revolutionary spirit that had led to victory in the civil war 20 years earlier and the formation of the People’s Republic of China. A personality cult quickly sprang up around Mao. Some 1.5 million people were killed during the Cultural Revolution, and millions of others suffered imprisonment, seizure of property, torture or general humiliation. India 1960-1970, Learn History by Inter- Linking For UPSC IAS


  • Meanwhile, in INDIA we see the Naxalbari uprising in the year the following year of 1967 under the leadership of Charu Majumdar. The details of which will be discussed later in the following section.
  • Six-day War:

Another major incident that was happening meanwhile in 1967 was the Six-Day War between Israel and Egypt.

  • Six-Day War, also called June War or Third Arab-Israeli War or Naksah, brief war that took place June 5–10, 1967, and was the third of the Arab-Israeli wars.
  • Relations between Israel and its neighbours were not normalised after the 1948 Arab–Israeli War.
  • In 1956 Israel invaded the Sinai-peninsula in Egypt, with one of its objectives being the reopening of the Straits of Tiran that Egypt had blocked to Israeli shipping since 1950.
  •  Israel was eventually forced to withdraw but was guaranteed that the Straits of Tiran would remain open.
  • A United Nations Emergency Force was deployed along the border, but there was no demilitarisation agreement.
  • In the months before June 1967, tensions became dangerously heightened. Israel reiterated its post-1956 position that the closure of the Straits of Tiran to Israeli shipping would be a cause for war.
  • This was not taken heed of and Egypt proceeded with the closing and ultimately war broke out. Read more about the Israel-Palestine conflict here. India 1960-1970, Learn History by Inter- Linking For UPSC IAS

The environmental scenario in the 1960s

  • 1961: WWF (World Wide Fund for Nature) is created. Living Planet Index (since 1998, once in two years); earth hour and debt-for-nature-swap.
  • 1962: International Convention for the Prevention of Pollution of the Sea by Oil (1954), London was updated. Administered by IMO.
  • 1963: The Partial Nuclear Test Ban Treaty is signed by the U.S., the U.K. and the U.S.S.R.
  • Vienna Convention on Civil Liability for Nuclear Damage, Vienna 1963. It came into force in 1977.
  • India – civil liability for nuclear damage Act, 2010 after making amendments in the Atomic Energy Act, 1962.
  • 1964: IUCN publishes its First Red Data Book.
  • India 1960-1970, Learn History by Inter- Linking For UPSC IAS

Science and technological advancement in India during the 1960s

Nuclear technology during this period

  • The roots of nuclear power in India lie in the early acquisition of nuclear reactor technology from several western countries, particularly the American support for the Tarapur Atomic Power Station.
  • On 11 October 1960, the Indian government issued a tender for India’s first nuclear power station near Tarapur, Maharashtra and consisting of two reactors, each generating around 150 MW of electricity and to be commissioned in 1965
  • In 1961 Indian and Canadian governments agreed on conducting a joint study on building Canada-India nuclear power plant- based on CANDU reactor

Space and telecom sector:

  • The Indian space program received only financial support from the Soviet Union, which helped the Indian Space Research Organisation achieve aims such as establishing the Thumba Equatorial Rocket Launching Station.
  • The Indian National Committee for Space Research (INCOSPAR) was established by Jawaharlal Nehru under the Department of Atomic Energy (DAE) in 1962, with the urging of scientist Vikram Sarabhai recognizing the need in space research. INCOSPAR grew and became ISRO in 1969, also under the DAE
  • The first attempt to develop an indigenous electronic exchange was initiated at the Telecom Research Centre in the 1960s and the first breakthrough was a 100 line electronic switch developed in 1973.
  • Department of Electronics was established in 1970. India 1960-1970, Learn History by Inter- Linking For UPSC IAS

India after Shastri

  • After signing the Tashkent Agreement to end the Indo-Pak struggle. India faced another major loss in the form of death of Lal Bahadur Shastri, who died on the night after the signing ceremony. After this starts yet another era of Indian political history.
  • After Shastri’s death, a leadership election resulted in the elevation of Indira Gandhi, Nehru’s daughter who had been serving as Minister for Information and Broadcasting, as the third Prime Minister. She defeated right-wing leader Morarji Desai.
  • The Congress Party won a reduced majority in the 1967 elections owing to widespread disenchantment over rising prices of commodities, unemployment, economic stagnation, and food crisis.
  • Indira Gandhi had started on a rocky note after agreeing to a devaluation of the rupee, which created much hardship for Indian businesses and consumers, and the import of wheat from the United States fell through due to political disputes.

Major policies under Indira Gandhi

  • Gandhi inherited a weak and troubled economy
  • Fiscal problems associated with the war with Pakistan in 1965, along with a drought-induced food crisis that spawned famines, had plunged India into the sharpest recession since independence.
  • She started with the devaluing of money, in return for the restoration of foreign aid. It created hardship for Indian businesses and consumers.
  • India also had a humiliating defeat in the 1962 war with China. It necessitated India to strengthen its defense. India had to import a lot of arms from foreign countries. This again depleted India’s foreign exchange reserves to a dangerously low level of 625 million dollars in march 1966. To get out of this situation, the rupee was devalued from Rs. 4.76 to Rs. 7.50.
  • The devaluation was aimed at boosting exports and bringing in foreign capital into the country. It was a necessary measure to avoid a looming financial crisis in India. It was a step in the right direction of reforming the economy but the further process of liberalisation could not be carried out due to widespread opposition from left parties and even within the congress.
  • The importation of wheat from the United States fell through due to political disputes.
  • Following the 1967 elections, Gandhi gradually began to move towards socialist policies.
  • In 1967 the Ten-point program of Gandhi is released. It emphasized greater state control of the economy with the understanding that government control assured greater welfare than private control.
  • By the end of the 1960s, the reversal of the liberalization process was complete, and India’s policies were characterized as “protectionist as ever”.
  • The Green Revolution in India subsequently culminated under her government in the 1970s and transformed the country from a nation heavily reliant on imported grains and prone to famine to being largely able to feed itself, and become successful in achieving its goal of food security.
  • The economy managed to recover in 1966 and ended up growing at 4.1% over 1966–1969

Indira Gandhi and Agriculture

Gandhi’s government resolved never again to become “so vulnerably dependent” on aid and painstakingly began building up substantial foreign exchange reserves. Gandhi had a personal motive in pursuing agricultural self-sufficiency, having found India’s dependency on the U.S. for shipments of grains humiliating.

Finally, except for devaluation, no other liberalizing procedures could continue in the Indian economic scenario.

Political turmoil during the mid-1960s

Sikh-Homeland Movement and formation of Punjab:

  • During her tenure, another major internal or regional issue to the surface was the rising Sikh Homeland movement (which was building up since the time of Nehru).
  • In 1966, the State of Punjab was bifurcated to create Haryana, the 17th state of the Indian Union, and the union territory of Chandigarh. This followed the demand for a separate ‘Sikh Homeland’ (the demand for the sovereign Sikh state was on since the early 1940s) raised by the Akali Dal under the leadership of Master Tara Singh. On the recommendation of the Shah Commission (1966), the Punjabi- speaking areas were constituted into the unilingual state of Punjab, the Hindi-speaking areas were constituted into the State of Haryana and the hill areas were merged with the adjoining union territory of Himachal Pradesh.

Naxalbari movement:

Meanwhile, in the east, the Naxalbari uprising had happened in 1967. Naxalbari uprising was an armed peasant revolt in 1967 in the Naxalbari block of the Siliguri subdivision in Darjeeling district, West Bengal, India. It was mainly led by local tribals and the radical communist leaders of Bengal and further developed into Communist Party of India (Marxist–Leninist) in 1969. The event became an inspiration to the Naxalite movement which rapidly spread from West Bengal to other states of India creating division within the Communist Party of India (Marxist) (CPI(M)) party.

Important economic measures (1965 onwards)

  • Monopolies and Restrictive Trade Practice (MRTP) Act of 1969- The act came into force from 1st June 1970. The act aims to prevent the concentration of economic power, provide for control of monopolies, and protect consumer interest.
  • Nationalization of fourteen large commercial banks in 1969- the 14 banks held 85 per cent of bank deposits in the country at that time. The core objective for nationalization was to energize priority sectors at a time when the large businesses dominated credit profiles. Even though the banks lent credit, the disbursal to the rural areas and small scale borrowers was far less as compared to the industry despite the Banking Regulation Act, 1949.
  • The Patent Act of 1970- passed in 1970, came into force on 20th April 1972, replacing the Indian Patents and Designs Act 1911. The Patents Act was largely based on the recommendations of the Ayyangar Committee Report. One of the recommendations was the allowance of only process patents concerning inventions relating to drugs, medicines, food and chemicals.
  • The Industrial Licensing Policy of 1970
    • The policy defines a sector called heavy investment sector. It consisted of industries involving an investment of more than Rs 5 crore. All such industries were opened for private sector except those reserved for the public sector in IPR, 1956.
    • Industries involving investment between Rs 1 crore and 5 crores were included in the middle sector. The licensing policy was considerably liberalised and simplified for these industries
    • The setting up of Industries involving an investment of less than Rs 1 crore does not require any license.


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