Critically explain the economic policy prior to 1991, with its achievements and failures



Salient features of the policy were as follows :
(i) Economic growth to be achieved during five- year plans.
(ii) Public enterprises to play an important role.
(iii) Import substitution to be the centre of the process of industrialisation.
(iv) Domestic industries to be developed along with small scale industries.
Achievements :
(i) Economic growth got a push due to increased agricultural production. Industrial production also increased.
(ii) Growth of large scale industry projected an infrastructural shift in the Indian economy.
(iii) Growth of small scale industries made a substantial contribution in achieving the objectives of growth with equity and social justice.
Failures :
(i) The public sector industries by incurring huge losses caused a drain of several scarce national resources.
(ii) Domestic industries failed to achieve international standards of product quality.
(iii) Foreign exchange reserves depleted to a very low level. Briefly the growth process started showing signs of stagnation across all sectors of the economy, industry in particular. Thus the govt, had to shift to New Economic Policy of 1991.