In the given question, a statement of Assertion is followed by a statement of Reason. Mark the correct answer.

Assertion: The Indian economy is described as a 'mixed economy'.

Reason: A mixed model like this was open to criticism from both the left and the right.

Both the Assertion and the Reason are correct but the Reason is not the correct explanation of the Assertion.

The correct answer is Option 2 - Both the Assertion and the Reason are correct but the Reason is not the correct explanation of the Assertion.

Assertion:  Indian economy is described as a 'mixed economy'.

Reason: A mixed model like this was open to criticism from both the left and the right.

Reason that explains assertion: India did not accept the capitalist model of development in which development was left entirely to the private sector, nor did it follow the socialist model in which private property was abolished and all the production was controlled by the state. Elements from both these models were taken and mixed together in India. That is why it was described as a ‘mixed economy’.

India did not follow any of the two known paths to development - it did not accept the capitalist model of development in which development was left entirely to the private sector, nor did it follow the socialist model in which private property was abolished and all the production was controlled by the state. Elements from both these models were taken and mixed together in India. That is why it was described as ‘mixed economy’. Much of the agriculture, trade and industry were left in private hands. The state controlled key heavy industries, provided industrial infrastructure, regulated trade and made some crucial interventions in agriculture. A mixed model like this was open to criticism from both the left and the right. Critics argued that the planners refused to provide the private sector with enough space and the stimulus to grow. The enlarged public sector produced powerful vested interests that created enough hurdles for private capital, especially by way of installing systems of licenses and permits for investment. Moreover, the state’s policy to restrict import of goods that could be produced in the domestic market with little or no competition left the private sector with no incentive to improve their products and make them cheaper. The state controlled more things than were necessary and this led to inefficiency and corruption.