The economic governance of a country can sometimes shift between governments taking centre stage and private enterprises playing a leading role. With the diversity in our economy, India is a unique blend of both these aspects.

Here, we will look into how a mixed economy plays out in India and everything else you need to learn about the concept of a mixed economy.

• The mixed economy of India is a combination of capitalist and socialist principles.
• The priority of a mixed economy is the welfare of the citizens.
• This type of economy also helps with the proper utilisation of resources.

Think of a mixed economy as capitalism and socialism combining forces. Such an economy adopts the characteristics of both these narratives to include public and private sectors functioning and having different objectives.

The main aim of the private sector in such an economy is to make profits, while the public sector looks to help the citizens. This kind of coexistence adds to and aids a country's economic growth.

Under the imperial rule, India’s economy faced stagnation. This led to the adoption of certain policies that encouraged industrial,  scientific, and technological advancements. The years 1948 and 1956 saw many industrial policies being implemented. This furthered the growth of the mixed economy in India. In a mixed economy, though private companies maintain their autonomy in their operations, certain mechanisms placed by the government monitor the same.

With the liberalisation of India's economy in 1991 came the boost the private sector needed to grow. All these three factors combined played a huge role in propelling India’s GDP from a mere 2.7 lakh crore to one of the world's largest economies.

India’s mixed economy has many aspects to it. Here’s a look at them:

1. Controlled but free economic development

• Encouragement of free economic activities by the government.
• However, necessary controls are implemented to avoid the drawbacks of other economic systems.

2. Welfare of citizens is a priority

• One of the main aims of India's mixed economy is economic welfare.
• With fiscal policies in place, private companies are encouraged to contribute towards greater economic welfare.
• The public sector provides employment opportunities to the citizens.
• Price policies are implemented to prioritise economic welfare instead of profit maximisation.

3. Economic planning

• The Government is responsible for economic planning and policy implementation.
• To develop in a planned and coordinated manner, the public and private sectors must keep predetermined guidelines in mind.

4. Price regulation

• The government can exercise price control and regulation.
• Normally, these measures let industries freely determine prices.
• However, in case of emergencies, such measures enforce controls to distribute goods through the Public Distribution System or PDS.

5. Co-existence of private and public sectors

• A mixed economy consists of both private and public sectors.
• Heavy industries like atomic energy and defence equipment are controlled by the public sector.
• Agriculture, cottage industries, and consumer goods are looked after by the private sector.

A mixed economy comes with several advantages. These include:

1. Freedom

• The mixed economy in India lets the factors of production choose their occupations.
• Private enterprise initiatives are encouraged to help consumers dispose of their incomes keeping the established policies in mind.

2. Welfare

• In a mixed economy, the government focuses on the welfare of citizens.
• This is done through housing, minimum wages, good working conditions, etc.

3. Resource allocation

• Helps with the proper utilisation of resources.
• This is done through economic planning to overcome hurdles like shortages, fluctuations, etc.

Where there are advantages, there are disadvantages as well. Some of them include:

1. Inefficiency

• The public sector can underperform because of factors like discrimination, corruption, etc.
• The private sector can also face issues with their performance due to excessive control.

2. Power concentration

• Avoidance of concentration of economic power might not always be possible.
• Sometimes private businesses can exploit government policies to profit.

The mixed economy of India is a combination of capitalist and socialist principles. This helps both the public and private sectors to coexist. The mixed economy has proven to be extremely effective keeping in mind the pace at which it has grown since independence. India’s mixed economy is extremely adaptable helping with the overall progress of the nation.

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