After independence, India had to choose a pattern of development for the country. It did not accept the capitalist model of development which gave dominance to the private sector. It also rejected the socialist model in which all the production and other economic activities were controlled by the state. Rather India adopted a model which combination of both these models. Thus India followed a mixed economic pattern of development.
Under the mixed economic system, most of the agriculture, trade and industry were controlled by the private sector. But the state established and controlled basic and key industries, heavy industries, provided basic industrial infrastructure, regulated trade and made crucial interventions in the private sector whenever necessary.
The mixed economic development pattern received mixed reviews. Some of the positive outcomes of the model are:
• Many large developmental projects were undertaken by the government. This increased the social capital of the country. These included construction of mega- dams like Bhakhra-Nangal and Hirakud for irrigation and power generation.
• Many basic and heavy industries were established in the public sector. It mainly included steel plants, oil refineries, manufacturing units and defence production industries.
• Many efforts for the improvement of transportation and communication facilities were taken by the government.
But according to many, the mixed economic pattern resulted in many negative outcomes. Some of them are:
• The private sector did not receive space and the incentive to grow. The public sector had control over the private sector by the system of licenses and permits.
• The private sector did not have any incentive to improve their products and make them cheaper since there was no foreign competition because of the restricted imports.
• The excessive control of the state led to inefficiency and corruption.
• The intervention by the state created a new middle class with very high salaries, but with no accountability.
• There was no decline in the poverty rates; even though the proportion of poor reduced.
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