Question

Explain the purpose of mixed economy in India.

Answer 1

An economic system, such as that found in India, which seeks to compromise between capitalism and socialism is known as Mixed economy. In such a form of economy, the elements of government control are combined with market elements in organising production and consumption. The coexistence of large public sector with the big private sector has transformed the economy into a mixed one.

Industrial policies of 1948 and 1956 formulated by the Indian government have made the provision of such coexistence. In effect, India chose to tacitly support capital formation in the private industries/sector at the cost of public industries/sector and the Second-Five Year Plan was formulated.

The private sector was tacitly favoured to exploit the consumers as well as the public sector. Public Sector seeks to avoid regional inequalities, provides large employment opportunities and often its price policy is guided by considerations of economic welfare rather than by profit motive.