Which sector saw a diversion of resources due to Indo-China conflicts after 1962?

Defense

While India had commenced development planning with limited resources, conflicts with neighboring nations disrupted its five-year plans. The already scarce resources were redirected towards the defense sector, particularly after the events of 1962, necessitating a drive for military modernization. The Department of Defence Production was established in November 1962, followed by the establishment of the Department of Defence Supplies in November 1965. The impact of these developments affected the Third Plan (1961-66), leading to a succession of three Annual Plans before the commencement of the Fourth Plan in 1969.

The wars had a profound impact on India's financial landscape, leading to a substantial surge in defense expenditure.