Thoughts on the Indian Economy 1960-70

India surprised many sceptics at the dawn of the 1960s - we managed to sustain our unity post-independence, despite the doomsday predictions of many naysayers. But there was so much more to be done. At the beginning of this decade, the literacy rate was just 28% and life expectancy only 40 years.? By 1961-62, state land reforms were underway with the implementation of land ceiling acts. These reforms would coalesce into the national land reforms in 1970s. For many South-East Asian countries, prosperity began with land reforms. Sadly for us, the reforms were mismanaged, lacking political will, resulting in the poverty of succeeding generations.

The decade also began with the Indo-China War of 1962 - the faith we'd put in our northern neighbours (& enshrined in the Panchsheel?Agreement of peaceful coexistence) was entirely dismantled. Nehru ji was no longer the same man - he died shortly after that in 1964. Lal Bahadur Shastri takes over the reins, serving as our prime minister from 1964 to 1966. India and Pakistan go to war in 1965 - India wins the war and holds on to Kashmir.?Shastri ji 's stature grew. But these conflicts had profound economic implications. The defence budget soared to 3.2% of the GDP, straining an already fragile economy. The wars disrupted economic stability, leading to inflation and depleting foreign exchange reserves.?The 1965 war coincided with severe droughts, drastically reducing grain production from 89.4 million tonnes in 1964-65 to 72.3 million tonnes in 1965-66, a drop of 19%. This exacerbated food shortages and highlighted the vulnerabilities of India's agricultural sector. Our dependence on foreign aid - for both food and military assistance - was high.

The times were desperate!?Shastri ji appealed to the people on AIR to skip one meal a day. Enter?M.S. Swaminathan - the father of the Green Revolution.?The Green Revolution, with the introduction of high-yield variety seeds of wheat, was a turning point in India’s agricultural sector. This movement was partly driven by the need to reduce reliance on food aid imports from the US, which were impacting India's foreign policy autonomy.?This was also the decade in which the Minimum Support Price (MSP) was introduced. MSP was first introduced for wheat, but was extended to gradually to other crops. Agri output soared, especially in the Punjab region. However, while we soaked in the positives of the?Green Revolution during that decade and possibly the coming two, Punjab witnesses an economic & ecological crises in future years, with its ground water depleting by the excessive use of pumps running on free electricity. Additionally, her children also suffer from the?excessive use of chemical fertilisers, pesticides and stubble burning. MSP, most often?

Shastri ji coins the slogan "Jai Jawan Jai Kisan" in 1965.?Concurrently, the White Revolution in Gujarat's Anand district, spearheaded by the cooperative movement, transformed India's dairy industry, making the nation self-sufficient in milk production.?Dr Verghese Kurien - the father of the White Revolution was prescient - he said "India's place in the Sun will come from the partnership between wisdom of its rural people and skills of its professionals".?

Shastri ji leaves for his heavenly abode in 1966 under mysterious circumstances.?The Congress Party elected Indira Gandhi over Morarji Desai to officially succeed Shastri ji, mistaking her to be a?gungi gudiya. She surprises many & her tenure was marked by bold (& often disastrous) economic reforms.?Indira Gandhi’s drastic devaluation of the Indian rupee by 57% in 1966, from 4.76 to 7.50 per US dollar, had significant domestic implications - inflation soared to 13% by 1967. Further, prior to the 1960s and the oil boom, countries such as UAE, Qatar, Bahrain, Kuwait, and Oman utilised the Indian Rupee as their designated currency. These countries were now forced to?establish their own currencies. She nationalises banks in 1969, a move?aimed to redirect credit flow towards agriculture and rural areas. While she gained popularity amongst the masses, & the move increased financial savings and rural banking, it also led to complacency and politically influenced lending decisions, fostering crony capitalism. In 1969 her government introduced the?Monopolies and Restrictive Trade Practices (MRTP) Act aimed to curb monopolies but inadvertently discouraged business growth, a consequence still felt today with the predominance of small and medium enterprises in India.

This decade also saw the birth of many well known companies. Fabindia was setup in 1960 by?John Bissell who interestingly came to India as an advisor to the?Central Cottage Industries Corporation to improve its exports.?MRF, initially established as a?small toy balloon unit goes public in 1960 and starts manufacturing?automotive tyres and tubes. Dhirubhai Ambani establishes the Reliance Commercial Corporation in 1966. BHEL, the?Shipping Corporation of India, the?Fertilizer Corporation of India, IDBI Bank, and even Sapna Book House were established in this decade.

Globally, the 1960s were a period of significant events. The US escalated its involvement in Vietnam, straining its relations with India, which maintained a non-aligned stance, but perceived by the US as pro-Soviet. This shift brought the US closer to Pakistan, impacting India in the subsequent decades. Over 30 African nations gained independence during this decade, reshaping global geopolitics. The Berlin Wall's construction in 1961 symbolised the Cold War's divide, and the Cultural Revolution began in China post 1965. The decade also saw strained Sino-Soviet relations and temporarily pushed China closer to the US.

Japan’s post-war economic miracle continued into the 1960s, making it the world's second-largest economy. The launch of the Tokaido Shinkansen, the world's first bullet train, epitomised this growth. Similarly, South Korea experienced rapid development (The Miracle on the Han River), with the Hyundai Motor Company’s founding in 1967 marking the beginning of its industrial transformation.?The Organization of the Petroleum Exporting Countries (OPEC), founded in 1960, began to assert control over oil prices by the late 1960s. This led to a dramatic rise in oil prices, profoundly impacting oil-importing countries like India, which faced higher costs for energy imports. This surge in oil prices contributed to inflation and stunted economic growth.

There was much happening in SE Asia as well. For starters, the Association of Southeast Asian Nations (ASEAN) was established in 1967.? Indonesia witnessed a lot of turmoil. By the mid 1960s,?Sukarno was effectively sidelined, and Suharto began to consolidate power, marking the beginning of the "New Order" regime. Singapore gains self-governance and the legendary?Lee Kuan Yew becomes its first Prime Minister.?Singapore seeks to merge with Malaysia. The merger, which was achieved in 1963, was dismantled in 1965 and?Singapore became truly free. The Economic Development Board in Singapore was established in this decade. Pakistan was disintegrating - on the western side Yahya Khan, imposes martial law and assumes the presidency taking over from Ayub Khan. On the eastern side?The Awami League, led by Sheikh Mujibur Rahman, was gaining popularity, seeking?greater autonomy and economic rights. Violent clashes rock the country at the end of the decade.

In 1969, humanity reached a new frontier - the Apollo 11 mission by NASA puts the first man on the moon. Back home though, Indira Gandhi was content in putting men behind bars - the coming decade 1970-80 will witness one of the darkest episodes in Indian history, wreaking havoc on our economy!?