Critically explain the economic policy prior to 1991, with its achievements and failures.
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Salient features of the economic policy were as follows:
- Economic growth to be achieved during five-year plans.
- Public enterprises to play an important role.
- Import substitution to be the centre of the process of industrialisation.
- Domestic industries to be protected from foreign competition
- Large scale industries to be developed alongwith small scale industries, etc.
- Economic growth got a push due to increased agricultural production. Industrial production also increased.
- Growth of large scale industry projected an infrastructural shift in the Indian economy.
- Growth of small scale industries made a substantial contribution in achieving the objectives of growth with social justice.
- Public sector industries, by incurring huge losses, caused a drain on the nation's scarce resources.
- Domestic industries failed to achieve international standards of product quality.
- 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 government had to shift to New Economic Policy of 1991.
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