Introduction:-
MIXED ECONOMY
Mixed economy is a mixture
of capitalism & socialism. The mixed economy tries to avoid the drawbacks occurred
due to the extremeness of the pure capitalism & pure socialism. It makes
the middle path between the capitalism & socialism. In this system, some of
the economic activities are fully owned & controlled by the government
instead of all economic activities like the socialistic economy. In mixed
economy, both the private sector & public sector co-exist. Mixed economy
reduces the inequality of income. Due to progressive taxation policy, (income
tax at higher rates at the higher slabs of income) income from rich people is
withdrawn. Due to increased expenditure on public utilities & services,
economic benefits to the poor people are provided.
In the on-going era, we
don’t find pure capitalism in any country of the world. Now-a-days, the
interference of government & its control over the economic fields has
increased, even in the countries having capitalistic economy. Today socialistic countries are also accepting the role of
economic freedom & are providing the individuals the right to own private
property & gain more assets. In the mixed economy, private sector is
operated by the price mechanism. Government takes the decisions related to
production & price in the public sector.
As the private sector
co-exists with the public sector, it is free to develop itself. The government
adopts the licensing system to regulate the private sector so that it may work
in the national interest. Consumers are the sovereign body in economy & the
production companies produce the commodities according to the choices of the
consumers. In this economy, labors are saved from being exploited by the
capitalists as the government passes several factory acts, minimum wages act
& restricts the employment in the hazardous industries. In mixed economy,
the monopolies are controlled & regulated by the government in the public
interest.
It can be said that almost
all the countries of the world are proceeding towards the acceptance of mixed
economy.
MIXED
ECONOMY IN TERMS OF INDIA
India accepted the
policy of mixed economy after independence. In 1948, India declared itself a mixed
economy for the very first time through the Industrial Policy Statement & it was later confirmed by the Industrial Policy Statements of the
years 1956, 1977 & others. The Industrial
Policy Resolution of 1948
categorized the Indian industries mainly into four classes: -
·
Exclusively government policy;
·
Government controlled sphere;
·
Industries subject to state regulation & control;
&
·
The rest industrial field was left for the private
sector.
The Industrial Act, 1951 was passed to control &
regulate private industrial enterprises.
Features of Indian
economy due to which it is regarded as a mined economy:-
1. Multiple
Sectors: - Different sectors such as private sector, public
sector, joint sector & co-operative sectors are found in a mixed economy
& since all the sectors are found in the Indian economy; therefore it is
called a mixed economy.
2. Nationalization: - Government
takes the control over certain occupations of public importance by
nationalizing them.
Ex. Nationalization of banks (14 in 1969 & 6 in
1980.) & some of the coal, textiles, transport etc.
3. Planning System: - Like
socialistic economy, mixed economy has also a planning system, but it is
different from that of the socialistic economy. In this economy, plans are
formulated by the planning commission to manage & control the public &
private sectors.
4. Government
Subsidy & Control: - In mixed economy, at one hand sufficient subsidies
are provided by the government to promote the useful activities for the society
while at the same time on the other hand, activities harmful for the society
are checked time to time & controlled.
5. Economic
Policies: - several economic policies like monetary, fiscal, wage etc. are brought
into force. Progressive taxation policy is adopted.
6. Social Welfare: - All
policies & decisions are made with a view regarding the idea of social
welfare but private profit is also not ignored.
7. Controlled
Price System: - price mechanism (interaction of demand &
supply) is neither completely free nor completely restricted. The minimum &
maximum prices of commodities are fixed by the government, only for certain
commodities price is fixed according to price mechanism.
Is mixed economy suitable for India?
Since a mixed economy tries to include the good
features of both the capitalistic & socialistic economies & avoids
their evils, it may be regarded as the most suitable economic policy for India. In other
words, it may be called the Golden Path towards
the development & growth of the nation. In my opinion it is the best
economy for a democratic country like India. By following this economy, India has
achieved many milestones in the terms of economic growth & development, but
many more are remaining yet uncovered.
Mixed economy is suitable for India because
as public & private sector function side-by-side, their combined efforts
lead to rapid economic growth. Resources are utilized efficiently & their
wastage is minimized. Since individuals have right to own private property
& law of inheritance is applicable, some people get richer & richer
while public sector tries to provide economic facilities to general people, due
to which inequality of income is reduced. The planning commission of India makes
policies for developing every region of the economy. In this way every region
such as agriculture, education etc. is covered for growth. Due to the mixed
economic policy of India, individuals have been provided the right to own
private properties & law of inheritance is applicable, people work more to
earn more which finally leads to rapid development in the fields regarding like
agriculture, industries & other services.
Due to the following aspects of mixed economy in the
context of development of India, we see that mixed economy is the best economy
rather than any other economy like capitalistic or socialistic economy, as
applicable to India
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