Mixed economy in India

 In India, mixed economic system was proposed by Shri Jawahar Lal Nehru. In mixed economic system public sector co-exist with the private sector, with both private individuals and government holding a significant portion of production units. The Indian mixed economy is characterised by predominance of public sector. The Indian government has reserved control in certain sensitive sectors like defence, besides core, heavy and basic industries, social and economic infrastructure including banking and insurance. Hence, public sector in Indian economy is commonly referred to as ‘engine of growth’. The state reserved its role and control over key industries including defence, power, railways, waterways, shipping, heavy industries; to enumerate some.

The early phase of economic planning in India was characterised by predominant role of state and was called, ‘development of socialistic pattern of society’. It was followed by ‘democratic socialism’, aiming at growth with social justice. During this stage, the state initiated programmes for reducing income and social inequalities. However, over the years many reforms have been introduced and economy has been liberalised for increased participation of foreign and private players. Though private sector was allowed to operate in other areas of economy, it was necessary that self-interest was aligned with social interests. In case, the private players exploit the workers and fail to subordinate the profit-maximisation, the state shall intervene and regulate the working of private sector. Thus, it can be aptly described as ‘Mixed Capitalistic Economic System’.

The mixed economic system is desirable from socio-economic point of view. Most countries have a mixed economic system, with some private ownership and some government ownership, as both capitalistic and socialistic economic systems are extreme approaches. Whereas in capitalistic model, all means of production are owned by private players and driven by profit motive, in the socialistic system (also called Soviet model), all means of production are state owned. The Soviet model leads to a totalitarian state in which the citizens are denied of democratic freedom and power is concentrated in hands of state cabinet, which are against the democratic system of power. On the other lateral, in the capitalistic system there is exploitation of labour and workers as the system is driven by profit motive. The mixed economy framework permits co-existence of public and private sectors, both of which have to work for attainment of socio-economic goals of planning. Over the years, many economic reforms have been introduced to balance economy in the interests of nation. 

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