Why is India called planned ecinomy?
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The economy in India today resembles a capitalist economy with certain modifications. Most economies in the world sit somewhere between a market economy and a centrally planned economy – India is one of these countries that has a mixed economy with several characteristics of a market economy. This country tries to change the structure of the capitalist economy to make it more appropriate for model economy situations.
As mentioned previously, India is a combination of a Socialist and a Capitalist economy. This economic system was adopted after Independence with the intention of procuring the advantages of both systems while avoiding the disadvantages. The productive activities in India are divided between the government (public sector) and the people (private sector). Some examples of industries which are placed in the public sector include: the basic industries, the capital good industries and the heavy industries whereas light industries and consumer goods industries are placed in the private sector. While the activities of the public sector are guided by welfare, the activities of the private sector are guided by profit. This creates balance in the economy as it ensures the acquisition of profit with a high level of public welfare. The public sectors are completely directed by the government whereas the private sectors are indirectly controlled by the government.
In a mixed economy, or a modified free enterprise system, private property is owned by individuals, corporations or the government. The government sets regulations which affect private property. Additionally, the government owns schools, parks, and real estate. In India, almost the entire agricultural sector is under private ownership. However, in the non-agricultural sector, three quarters of the industries are also in the private sector. Wholesale and retail trade is part of the private sector as well as air transportation which is rapidly being privatized.
The role of the public sector is supportive. The public sector is expected to build the infrastructure which is used by the private sector. The public sector also develops the basic and capital goods industries. Their products are used by the private sector but even in this field, are fast moving towards privatization. The state intervenes in any productive activity with the intention of making it more community friendly. If it is found that the private sector is cornering the stocks of a commodity and exploiting the consumers, the state setup its own units to produce the commodity and augment its supply. The public sector mainly specialized in the production of public utilities such as local transport, supply of cooking gas, supply of water and such other commodities which enter into the common budget. The government also undertakes purchase and sale of necessaries of life so as to protect the vulnerable sections of the community against an excessive rise in prices.
To conclude, a mixed economy is crucial for a developing economy like India in its initial stages. But as the economy develops the private sector rise into prominence and the mixed economy is knowingly (or unknowingly) transformed in to a market regulated economy.
As mentioned previously, India is a combination of a Socialist and a Capitalist economy. This economic system was adopted after Independence with the intention of procuring the advantages of both systems while avoiding the disadvantages. The productive activities in India are divided between the government (public sector) and the people (private sector). Some examples of industries which are placed in the public sector include: the basic industries, the capital good industries and the heavy industries whereas light industries and consumer goods industries are placed in the private sector. While the activities of the public sector are guided by welfare, the activities of the private sector are guided by profit. This creates balance in the economy as it ensures the acquisition of profit with a high level of public welfare. The public sectors are completely directed by the government whereas the private sectors are indirectly controlled by the government.
In a mixed economy, or a modified free enterprise system, private property is owned by individuals, corporations or the government. The government sets regulations which affect private property. Additionally, the government owns schools, parks, and real estate. In India, almost the entire agricultural sector is under private ownership. However, in the non-agricultural sector, three quarters of the industries are also in the private sector. Wholesale and retail trade is part of the private sector as well as air transportation which is rapidly being privatized.
The role of the public sector is supportive. The public sector is expected to build the infrastructure which is used by the private sector. The public sector also develops the basic and capital goods industries. Their products are used by the private sector but even in this field, are fast moving towards privatization. The state intervenes in any productive activity with the intention of making it more community friendly. If it is found that the private sector is cornering the stocks of a commodity and exploiting the consumers, the state setup its own units to produce the commodity and augment its supply. The public sector mainly specialized in the production of public utilities such as local transport, supply of cooking gas, supply of water and such other commodities which enter into the common budget. The government also undertakes purchase and sale of necessaries of life so as to protect the vulnerable sections of the community against an excessive rise in prices.
To conclude, a mixed economy is crucial for a developing economy like India in its initial stages. But as the economy develops the private sector rise into prominence and the mixed economy is knowingly (or unknowingly) transformed in to a market regulated economy.
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