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7/29/2019 india as a mixed economy synopsis
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DR. RAM MANOHAR LOHIYA NATIONAL LAW
UNIVERSITY
2013-14
Final Draft
ECONOMICS
I NDIA AS A M IXED ECONOMY
Under Supervision of: Submitted by:
Mrs. (Dr.) Madhuri Srivastava Akshayvat Kislay
Asst. Professor (Law) Roll No.10 (Section A)
Dr. RML National Law University, Semester- I.
Lucknow. B.A. L.L.B. (Hons.)
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What is a Mixed Economy?
As the name suggests, Aneconomic system including
features of both public and
governmental control.
Mixture of Capitalism andSocialism.
Private economic freedomco-existing with centralizedeconomic planning and
government regulation.
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India: A Mixed Economy
Post-Independence (1947),Pundit Jawaharlal Nehru
proposed the idea of
Mixed Economy.
Initial motive
: to reduce
social and economic stress.
Priorityon Economicgrowth with social justice.
Commanding role of statein industrial production and
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import substitution
strategy.
Role in agriculturelimitedto infrastructure
development, irrigation and
trade.
Resulting low GDP at 3-4%p.a.
Finally, Balance of paymentcrisis of 1991 initiatedEconomic Liberalization.
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Two contradicting views:
Should India adopt Freeenterprise or the Capitalism
model such as in USA?
OR
Should India continue towork on the Mixed
Economy Model as it has
done since independence?
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Such an argument is very
controversial and we shalldiscuss both the sides of the
coin.
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Preference for Capitalism
Scenario
The recent case of failure ofIndias esteemed airline
services Air India can be
attributed to faulty
government enterprise
handling by Mr. Morarji
Desai.
The destruction of Air Indiastarted with the airline
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becoming a public sector
undertaking in 1977.
Once JRD Tata moved out,babus came in, AI was used
and abused by ministers
and bureaucrats.
Motives were short termplanning and sightedness
which resulted in inept and
demotivated management,
political interference, and
corruption.
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Perfect example ofgovernment run enterprisegone wrong.
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Preference for the Mixed
Model Scenario
In wake of currentrecession, the recent
collapse of GM in USA is a
perfect exemplar of failure
of free
enterprise/capitalism
model.
Iconic GM filed bankruptcywith government acquiring
60% of the auto giant
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signals nothing short of
nationalism.
Hence, mixed economymodel, where government
produces for social interest
is preferable in a
developing economy like
India, which cannot yet
afford disasters like GM.
Mixed economy model wasadopted to safeguard Indian
companies from
competition and foster
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economic growth in
backward regions.
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Public Sector Performance in
past years
According to 2006-2007estimates, the public sector
in India earned profits to
the tune of Rs 81550 crore
and achieved a turnover of
more than Rs 9,60,000
crore.
The Central public sectorenterprises contributed as
much as Rs 1, 26, 900 crores
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by way of taxes and more
than Rs 20800 crores byway of interest and
dividend to the Central
Government.
The Public Sector employs16 Lakh people and there
by providing employment
to sizable section of the
population.
The national policy onpublic sector envisages that
generally profit making
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PSUs do not qualify for
privatization.
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Conclusion
Thus what India needs is tostick to mixed economy
model to protect and
generate jobs and usher
balanced development of
backward regions. We need
not opt for a blind private
enterprise.
Its true that inefficiencyand failure to bring profits
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characterized the public
sectors few years ago.
With competition lurkingfrom liberalized economies,
the public sector too has
pulled up its socks.
Indiscriminate privatizationonly encourages
businessmen with profit
motives, which a developing
nation like India cannot
afford.
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Need of the Hour
We need to invent Indiaspecific solutions for the
economic problems and not
to go by the wish list of the
Private Industry and Private
Financial Institutions.
There need to be healthybut friendly competition tooffer goods and services to
the common man at a
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reasonable and affordable
cost.
If the Government opts forDisinvestment as the policy
option, it endangers
employment opportunities
and balanced development
of the nation.
Private Enterprise alone isnot the mantra that can
ensure rapid development
and growth of the nation
need to be kept in mind.
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BIBLIOGRAPHY