Search in Indianmoney's WealthPedia

Home Articles Mixed Economy in India: What You Need to Know?

Mixed Economy in India: What You Need to Know? Research Team | Posted On Friday, November 15,2019, 05:24 PM

1.7 / 5 based on 18 User Reviews

Mixed Economy in India: What You Need to Know?



What is a Mixed Economy?

A mixed economy is a system that combines features of both socialism and capitalism. Two examples of a mixed economy are the U.S and France where both private and public sectors co-exist and work towards economic growth. The private entities work for the maximization of profit whereas the government sector works for the welfare and benefit of all citizens. It is a blend of both socialist and capitalist economy and countries have adopted such an approach to accelerate the economic growth of countries.

Want to know more about Investment Planning? We at will make it easy for you. Just give us a missed call on 022 6181 6111 to explore our unique Free Advisory Service. is not a seller of any financial products. We only provide FREE financial advice/education to ensure that you are not misguided while buying any kind of financial product.

Mixed Economy in India:

India too is a mixed economy and it has adopted this approach post-independence. The industrial policies implemented in the year 1948 and 1956 have helped the private and the public sector to co-exist. Also with the liberalization of the Indian economy, the opportunities for the expansion and growth of the private sector are enhanced. Also after the economic stagnation during the imperial rule, India has adopted policies for economic growth and lay the foundation for technological, scientific and industrial development.

See Also: Best Investment Plans for 2019

Features of Mixed Economy:

  • The Mixed economy provides circumstances where the private and the public sector can co-exist at the same time. Under the mixed economy, citizens get complete liberty to choose their occupation and can establish industries and individual businesses. However, monopoly is maintained in certain areas like defense, power and banking, and some basic industries. The government can regulate the prices in public interest through the price distribution system.
  •  Private property is allowed in a mixed economy provided there is an equal distribution of wealth and income. A Mixed economy does not support power and property to be concentrated in the hands of a few.
  • The government in a mixed economy always promotes economic development by implementing measures and schemes through economic planning. Thus economic planning is an important part of the mixed economy.
  • The government exercise control on price and regulate it. Normally, the government does not interfere with the price system and the industries are free to determine the prices of their goods. However, in the time of national crisis or emergencies, the government imposes price control and distributes goods through the PDS.
  • Under this system, both profit and social welfare co-exist. So a mixed economy can be both capitalists as well as exhibit characteristics of a socialist economy.
  • In a mixed economy, the government takes initiative to control private monopoly by implementing effective legislative measures. The government also has the power to convert these into public sector entities for the benefit of the citizens.

See Also: A Five-Minute Guide to the Systematic Investment Plan

Merits of Mixed Economy:

Listed below are the main advantages of a mixed economy:

Encourages the growth of the private sector:

The mixed economy provides an atmosphere that allows private sectors to grow. It leads to an increase in new opportunities and leads to the formation of capital within the country.  


Citizens in a mixed economy can enjoy both economic and occupational freedom which exists in a capitalist system. Individuals can take what occupation to pursue and can take decisions regarding production and consumption.

See Also: Types Of Investment Plans

Optimum use of resources:

In a mixed economy, the public sector works for the benefit of the citizens whereas the private sector makes maximum use of resources for the maximization of profit.

Economic planning:

The government takes measures to battle inflation and devises measures to control economic fluctuations.

Lesser economic disparity:

Here, the government takes measures to reduce economic disparity by implementing taxes on income and wealth. The Government provides subsidies to support low-income group and give facilities like free education and free medical facilities so that they can sustain alongside the high-income group.

Demerits of Mixed Economy:

There are also several disadvantages of a mixed economy which are as follows:

Lack of stability:

Some experts believe that the mixed economy lacks stability as the public sectors get maximum profit whereas the private sector is supervised and controlled.


Under this system, the private sector is believed to be over-regulated. Therefore, in a mixed economy both the sectors remain ineffective since one enjoys the freedom and the other is rigorously regulated.

Inefficient planning:

Since mixed economies lack comprehensive planning so large sectors of the economy remain outside the government control

Lacks efficiency:

Under the mixed economy, the government sector lacks efficiency due to lower restrictions whereas the private sector underperforms due to excessive restrictions imposed in the form of control, license, and permits.

See Also: Basics of Financial Planning

The Threat of nationalism:

Mixed economies pose a constant threat of nationalization of private sector entities.

More wastage:

Another problem of the mixed economy is the money that is allocated to fund various government projects end up into the pockets of intermediaries leading to misuse and wastage of resources.

You May Also Watch

Iframe Content

Keep your Financial Cognizance up to date with IndianMoney App. Download NOW for simple tips & solutions for your financial wellbeing.

Have a complaint against any company?'s complaint portal can help you resolve the issue. Just visit and lodge your complaint. If you want to post a review on any company you can post it on review and complaint portal

Be Wise, Get Rich.

What is your Credit Score? Get FREE Credit Score in 1 Minute!

Get Start Now!
Get It now!

This is to inform that Suvision Holdings Pvt Ltd ("") do not charge any fees/security deposit/advances towards outsourcing any of its activities. All stake holders are cautioned against any such fraud.