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India – as a mixed economy

As we have discussed earlier about the types of economies, namely capitalist, socialist and mixed economies, we are aware that India is a mixed economy. The features of a mixed economy which exist in India are:
  • Private ownership of means of production: This is observed in most of the agricultural, industrial and service sectors.
  • Important role of market mechanism: Market forces of demand and supply have a free role in determining the price of the commodity. The interventions of the government in price determination have substantially reduced.
  • Growth of monopoly: India has witnessed the emergence of a large number of big houses such as, Tatas, Birlas, Reliance, etc. in the private sector.
  • Presence of a large public sector along with free enterprise: Though the role of public sector has reduced, it co-exists with a large and dominating private sector. The public sector plays a crucial role in strategic sectors such as arms and ammunitions. It also sets up the infrastructure necessary for the development of the private sector.
  • Economic planning: The Planning Commission lays down overall targets for the economy as a whole, for the public sector as well as the private sector. The Government tries to achieve these targets by providing incentives to these sectors. Thus, planning is only indicative in nature and not compulsive.
Due to the presence of the above characteristics, we conclude that the Indian economy is a mixed economy.

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