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Critical evaluation of Mixed economy

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  • Category: Economics

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We may notice two opposite views on the working of mixed economy: one represented by the business community or ‘big business’ properly speaking and the other by the political leaders in the Government. These views are usually given expression to in the annual conferences of the Chambers of Commerce which are addressed usually by the Prime Minister and other high government spokesmen. There is usually a wordy warfare between the two. The business leaders are frankly critical of the government and the government spokesmen of the business community. The government charges the business community with black marketing, profiteering and not being patriotic enough to play a, proper role in the economy, whereas the business leaders hold the government responsible of inflation, economic stagnation and for the ills of the economy and of trying to squeeze out the private sector in a Variety of ways.

For instance, in the annual meeting of the Associated Chamber of commerce and Industry held in April, 1975, J.R.D. Tata said that mixed economy was dead or dying. He said, “Our economy will continue to stagnate while our population grows and we shall end up before the turn of the century under dictatorship or in a state of chaos and violence.” The then Prime Minister, on the other hand, extolled the virtues of the public sector and harped on its achievements. Mr. P.N. Haksar, the then Deputy Chairman of the Planning Commission, addressing the annual session of the Federation of Indian Chamber of Commerce and Industry termed Mr. Tata’s speech as a ‘funeral oration’ and said that this oration would be justified if mixed economy was really dead. He said that the problems of the country could not be solved by “composing lyrical passages on the death of mixed economy, raising ‘macabre’ vision of the hold of communists”.

He further said that it would be doing an injustice to argue that the concept of mixed economy obtained only abroad and what obtained in India was “Mixed-up economy.” These charges and counter-charges only blur the true vision of mixed economy. The reality is that despite the present ills of the Indian economy, the marriage of the public and private sectors in Indian economy is merrily going on and doing well. Both sectors are making a valuable contribution to the successful functioning of the Indian economy. As pointed out by Mr. Haksar, the country produced in terms of output 90% of the goods and services through private economy. This bears ample testimony to the vitality and virility of the private sector. Far from being dead, it is alive and kicking. There is little danger of its becoming extinct or being swallowed up by the public sector.

While private sect6r was a part of the national economy, State control was essential in the interest of integrated growth of the economy. Mixed economy in India was a byproduct of the government involvement in the task of economic development of the country. There is no doubt that government has played a remarkable role in developing infrastructural facilities and setting up big industrial units which have helped the private sector a great deal in its functioning.

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