Which one of the following statement is true about "Mixed Economy"?

It is the policy where the public and private sector co-exists and are complementary to each other

The correct answer is option (3) - It is the policy where the public and private sector co-exists and are complementary to each other

India opted for a mixed economy after independence. It contained the features of both socialism and capitalism. Thus, in India, the public and private sectors co-exist and are complementary to each other.

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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.

Then there were critics who thought that the state did not do enough. They pointed out that the state did not spend any significant amount for public education and healthcare. The state intervened only in those areas where the private sector was not prepared to go. Thus the state helped the private sector to make profit. Also, instead of helping the poor, the state intervention ended up creating a new ‘middle class’ that enjoyed the privileges of high salaries without much accountability. Poverty did not decline substantially during this period; even when the proportion of the poor reduced, their numbers kept going up.