By the beginning of the Third Plan (1960-61 to 1965-66) the Indian planners felt that the Indian economy had entered the “take off stage” and that the first two plans had generated an institutional structure needed for rapid economic development. Consequently, the Third Plan set as its goal the establishment of a self-reliant and self-generating economy.
Its immediate objectives were to : (i) secure an increase in the national income of over five per cent per annum and at the same time ensure a pattern of investment which could sustain this rate of growth during subsequent Plan periods; (ii) achieve self-sufficiency in food grains and increase agricultural production to meet the requirements of industry and exports; (iii) expand basic industries like steel, chemicals, fuel and power and to establish machine-building capacity so that the requirements of further industrialization could be met within a period of 10 years or so mainly from the country’s own resources; (iv) utilize fully the manpower resources of the country and ensure substantial expansion in employment opportunities; and (v) establish progressively greater equality of opportunity and bring about reduction in disparities of income and wealth and a more even distribution of economic power,
The Plan accordingly gave top priority to agriculture but it laid adequate emphasis on the development of basic industries. It aimed at increasing the national income by about 30 per cent from Rs. 14,500 crore in 1960-61 to about Rs. 19,000 crore by 1965-66 (at 1960-61 prices) and per capita income by about Rs. 17 per cent from Rs. 330 to Rs. 385 during the same period. However, because of India’s conflict with China in 1962 and with Pakistan in 1965, the approach of the Third Plan was later shifted from development to defense development. The Plan could achieve an annual growth rate of 2.7 per cent against the target of 5.6 per cent.