Question

enumerate its MERITS AND DEMERITS IN THE context of indian economy ?

Answer 1

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Merits of Mixed Economy:

There are several advantages of mixed economy which are as below:

(i) Encouragement to Private Sector:

The most important advantage of mixed economy is that it provides encouragement to private sector and it gets proper opportunity to grow. It leads to increase in capital formation within the country.

(ii) Freedom:

In a mixed economy, there is both economic and occupational freedom as found in capitalist system. Every individual has a liberty to choose any occupation of his choice. Similarly, every producer can take decisions regarding production and consumption.

(iii) Optimum Use of Resources:

ADVERTISEMENTS:

Under this system, both private and public sectors work for the efficient use of resources. Public sector works for social benefit while private sector makes the optimum use of these resources for maximisation of profit.

(iv) Advantages of Economic Planning:

In the mixed economy, there are all advantages of economic planning. Government takes measures to control economic fluctuations and to meet other economic evils.

(v) Lesser Economic Inequalities:

Capitalism enhances economic inequalities but under mixed economy, inequalities can easily controlled by the efforts of government.

(vi) Competition and Efficient Production:

Due to competition between both private and public sectors, the level of efficiency remains, high. All factors of production work efficiently in the hope of profit.

(vii) Social Welfare:

ADVERTISEMENTS:

Under this system, the main priority is given to social welfare through effective economic, planning. The private sector is controlled by the government. Production and price policies of private sector are determined to achieve maximum social welfare.

(viii) Economic Development:

Under this system, both government and private sector join their hands for the development of socio-economic infrastructures, Moreover, government enacts many legislative measures to safe guard the interests of the poor and weaker section of the society. Hence, for any underdeveloped country, mixed economy is a right choice.


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Answer 2

"Merits and Demerits of Mixed Economy

Merits:

• Encouragement to Private Sector

Mixed economy encourages private sector and gets proper opportunity to grow which results in the increment of capital formation within the country.

• Freedom

In a mixed economy, freedom of economic and occupational system is found allowing everyone to choose any occupation of his choice.

• Lesser Economic Inequalities:

Mixed economy helps in the reduction of inequalities by the efforts of government

Demerits

(i) Un-stability:

Mixed economy lacks stability. Some sectors like the public sector gets maximum benefits whereas sectors like the private ones remains controlled.

(ii) Ineffectiveness of Sectors:

Freedom is not granted to the private sector hence it becomes ineffective. This results in ineffectiveness among the public sector

(iii) Inefficient Planning:

A large sector of the economy remains outside the control of the government due to lack of comprehensive planning in the mixed economy.

"