Characteristics Of Mixed Economy-Business And Its Environment
Characteristics Of Mixed
Economy:
I. Co-Existence Of Public
And Private Sectors:
In a mixed economy, one will find
the existence of both the private and public sectors. In such a system, the
government will undertake the responsibility to build and develop certain
sectoral activities and leave the other activities for the private initiative.
In india, the government announced the adoption of the mixed economy system
through its 1948 industrial policy resolution. The government clearly earmarks
the industries to be completely under the state control, the industries which
are to be owned and controlled by the state as well as the private sector and industries which are
completely left for the private sector. In this way the resolution provided for
the simultaneous existence of both private and public sectors.
II.
State Participation In Economic Development:
This is the second feature of
mixed economy, according to which the state reserves its right to design and
decide the type of development to be achieved. In such a set up, the government
strives to promote the welfare of the country by ensuring social order, social
justice and establishing all the necessary institutions which are required to
achieve the desired pattern of growth and development.
III.
Distribution Of Ownership And Control Of Resources:
This is the next feature of mixed
economy. In this system, the government itself enters the field of production
so that the available resources are fully utilized. This will also help to
avoid concentration of wealth in the hands of a few and enable distribution of
ownership and control of productive activities. As a result there is no scope
for exploitation of any group, say labour, by any other group. In this way the
weaker section of the community is well protected and taken care of. Only the
mixed economy will enable the government to attain the objectives of the
directive principles of the indian constitution.
IV. Directing The Investment In Socially
Desirable Projects And Channels:
Mixed economy facilitates the
flow of investment into channels which confers the society with several
benefits. For example, the indian government has invested huge amount in
several projects to develop the infrastructural facilities. This forms the
basis for the development of other sectors. The investment in these infrastructural
areas will not come forth from the private sector as the return is nil. Hence,
the government in a mixed economic set up provides the thrust by developing the
necessary background and strength which will encourage the private sector to
invest in profitable opportunities. Thus, the government plays a key role in a
mixed economic system.
V. Scope
For Achieving Balanced Economic Development:
One left to itself, the private
sector would establish its enterprises only in urban or sub-urban areas and
that too in already well developed states. This will mean other areas will have
no scope for development. But in a mixed economy, the government will itself
undertake the initiative to set up industries in backward areas and encourage
the private initiative to set up industries in such areas by offering several
concessions and exemptions. In the absence of mixed economy, several states in
india would have remained industrially backward.
VI. Ultimate Control And
Regulation In The Hands Of Government:
This feature of mixed economy
clearly spells out that in every activity affecting the economy, the government
will be the ultimate authority. Though the private sector is assigned its role
to perform, the government will still monitor and control the way in which the
private initiative is performing its role. According to the 1948 industrial
policy resolution, the government made it clear that the industries already
established by the private sector belonging to the category in which new
industries will be established by the government alone, the government would
undertake the review of the working of these industries in private sector for a
decade and if it’s found unsatisfactory, they would be taken over by the
government. Though this was criticised as a threat to nationalisation, yet
through such a provision the government underlines its authority. Similarly in
the banking and insurance sectors, the government nationalised banks
emphasising its powers to control and regulate any sector.
VII. Co-Operation In The
Field Of Economic Development:
According to this feature of
mixed economy, the government formulates the design for development and invites
the private sector to participate in the development. It clearly spells out the
guidelines which would govern such co-operative efforts and the limits of
freedom granted to the private sector. In indian case, the government prepares
the plans for development and spells out the areas left for the private
initiative and the areas will be under state control. Hence, there is scope for
the development of private sector, though only according to the design
developed by the government.
Tags : Business Environment and Law-Business And Its Environment
Last 30 days 335 views