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india as a mixed economy synopsis

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    DR. RAM MANOHAR LOHIYA NATIONAL LAW

    UNIVERSITY

    2013-14

    Final Draft

    ECONOMICS

    I NDIA AS A M IXED ECONOMY

    Under Supervision of: Submitted by:

    Mrs. (Dr.) Madhuri Srivastava Akshayvat Kislay

    Asst. Professor (Law) Roll No.10 (Section A)

    Dr. RML National Law University, Semester- I.

    Lucknow. B.A. L.L.B. (Hons.)

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    What is a Mixed Economy?

    As the name suggests, Aneconomic system including

    features of both public and

    governmental control.

    Mixture of Capitalism andSocialism.

    Private economic freedomco-existing with centralizedeconomic planning and

    government regulation.

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    India: A Mixed Economy

    Post-Independence (1947),Pundit Jawaharlal Nehru

    proposed the idea of

    Mixed Economy.

    Initial motive

    : to reduce

    social and economic stress.

    Priorityon Economicgrowth with social justice.

    Commanding role of statein industrial production and

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    import substitution

    strategy.

    Role in agriculturelimitedto infrastructure

    development, irrigation and

    trade.

    Resulting low GDP at 3-4%p.a.

    Finally, Balance of paymentcrisis of 1991 initiatedEconomic Liberalization.

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    Two contradicting views:

    Should India adopt Freeenterprise or the Capitalism

    model such as in USA?

    OR

    Should India continue towork on the Mixed

    Economy Model as it has

    done since independence?

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    Such an argument is very

    controversial and we shalldiscuss both the sides of the

    coin.

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    Preference for Capitalism

    Scenario

    The recent case of failure ofIndias esteemed airline

    services Air India can be

    attributed to faulty

    government enterprise

    handling by Mr. Morarji

    Desai.

    The destruction of Air Indiastarted with the airline

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    becoming a public sector

    undertaking in 1977.

    Once JRD Tata moved out,babus came in, AI was used

    and abused by ministers

    and bureaucrats.

    Motives were short termplanning and sightedness

    which resulted in inept and

    demotivated management,

    political interference, and

    corruption.

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    Perfect example ofgovernment run enterprisegone wrong.

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    Preference for the Mixed

    Model Scenario

    In wake of currentrecession, the recent

    collapse of GM in USA is a

    perfect exemplar of failure

    of free

    enterprise/capitalism

    model.

    Iconic GM filed bankruptcywith government acquiring

    60% of the auto giant

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    signals nothing short of

    nationalism.

    Hence, mixed economymodel, where government

    produces for social interest

    is preferable in a

    developing economy like

    India, which cannot yet

    afford disasters like GM.

    Mixed economy model wasadopted to safeguard Indian

    companies from

    competition and foster

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    economic growth in

    backward regions.

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    Public Sector Performance in

    past years

    According to 2006-2007estimates, the public sector

    in India earned profits to

    the tune of Rs 81550 crore

    and achieved a turnover of

    more than Rs 9,60,000

    crore.

    The Central public sectorenterprises contributed as

    much as Rs 1, 26, 900 crores

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    by way of taxes and more

    than Rs 20800 crores byway of interest and

    dividend to the Central

    Government.

    The Public Sector employs16 Lakh people and there

    by providing employment

    to sizable section of the

    population.

    The national policy onpublic sector envisages that

    generally profit making

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    PSUs do not qualify for

    privatization.

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    Conclusion

    Thus what India needs is tostick to mixed economy

    model to protect and

    generate jobs and usher

    balanced development of

    backward regions. We need

    not opt for a blind private

    enterprise.

    Its true that inefficiencyand failure to bring profits

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    characterized the public

    sectors few years ago.

    With competition lurkingfrom liberalized economies,

    the public sector too has

    pulled up its socks.

    Indiscriminate privatizationonly encourages

    businessmen with profit

    motives, which a developing

    nation like India cannot

    afford.

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    Need of the Hour

    We need to invent Indiaspecific solutions for the

    economic problems and not

    to go by the wish list of the

    Private Industry and Private

    Financial Institutions.

    There need to be healthybut friendly competition tooffer goods and services to

    the common man at a

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    reasonable and affordable

    cost.

    If the Government opts forDisinvestment as the policy

    option, it endangers

    employment opportunities

    and balanced development

    of the nation.

    Private Enterprise alone isnot the mantra that can

    ensure rapid development

    and growth of the nation

    need to be kept in mind.

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    BIBLIOGRAPHY


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