Multiple choice

Which of the following factors hampered economic growth during the 2nd Five Year Plan?

  1. Rising inflation

  2. Suez crisis

  3. Denudation of forex reserves

  4. All of these
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The Second Five Year Plan (1956-61) faced multiple crises that hampered growth: rising inflation due to increased money supply, the Suez Crisis (1956) which disrupted trade routes and increased oil prices, and rapid depletion of foreign exchange reserves from heavy imports of machinery and capital goods. The plan's ambitious industrialization targets required massive imports, draining forex reserves.

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