ASSIGNMENT

Economics I
Planning in Mixed Economies: India as a Case

SUBMITTED BY-
Name-Harsh Seouran
BALLB (hons.) (self-financed)
Student ID-202306843 SUBMITTED TO-
DR. ANUJ DUBEY
(Faculty of Law, JMI)
CERTIFICATE-
This is to certify that HARSH SEOURAN carried out the project work entitled
“Planning in Mixed Economies: India as a Case” in partial fulfilment of the
requirement for ECONOMICS I assignment work. Under my guidance and
supervision, it is completed in the same to my satisfactions. The material in this
project is slightly original.

SUPERVISOR-
Dr. Anuj Dubey
(FACULTY OF LAW, JMI)
Date- 17 Nov. 23
 INDEX
• Introduction
• Historical context of Indian economic planning
• Effect of Globalisation and Liberalisation
• Policy impacts on different sectors
• Comparative study of Indian model
• Conclusion
 INTRODUCTION
Mixed economic planning refers to an economic system that incorporates
elements of both market-oriented capitalism and government intervention in
economic planning. In this type of system, the main aim is to provide for a free
economic system open for growth and competition, along with intervention
from government for social welfare, and fair-trade practices. The goal, often in
these types of mechanism, is to combine the efficiency and innovation of the
free market with the safety and social welfare of public policies. It aspires to
capitalise upon the competition arising from the free market to increase the
efficiency and innovation in the existing market and to avoid monopoly. While
doing that it still focuses on key social issues such as social welfare for the
weaker section, unemployment, income inequality and social security. Here, the
private and public sector co-exist wherein the private sector usually dominates
all the industries the public sector takes over either through strategical planning
or through direct involvement in industries where it’s intervention is deemed
necessary for the public welfare. The government in these systems tend to
intervene through fiscal and taxation policies implementing the social welfare
programs. The government invests and seeks to control the infrastructure like
transportation, communication and other essential utilities to provide for a
conducive environment for the growth of the private sector and its citizens.
Several countries that have historically followed a mixed economic planning
model like India, China, Brazil, Russia, etc. Each of these have combined
market mechanisms with government planning to varying degrees according to
their own historical and political contexts. Through this project I aim to explore
this concept of mixed economic systems through the example of India.
 HISTORICAL CONTEXT OF INDIAN ECONOMMIC PLANNING
India’s economic planning post-independence has been characterized by a series
of Five-Year Plans, each aimed at fostering economic growth, reducing poverty,
and achieving self-reliance. Here is an overview of the historical background
and key milestones in India's economic planning:

1. Independence and the Planning Era (1947-1951):

After gaining independence in 1947, India faced significant economic

challenges, including poverty, unemployment, and a lack of industrial
development.
The Planning Commission was established in 1950 to formulate and implement
economic plans.
The first Five-Year Plan (1951-1956) focused on agriculture, irrigation, power,
and social services. It laid the foundation for future economic planning.
2. Second Five-Year Plan (1956-1961):

This plan emphasized industrialization and focused on building the heavy

industries sector.
The establishment of the Industrial Policy Resolution of 1956 marked a
significant step toward a socialist pattern of development.
3. Third Five-Year Plan (1961-1966):

The third plan continued the focus on industrialization and also gave attention to
agriculture.
The Indo-China war in 1962 and the Indo-Pakistan war in 1965 posed
challenges to economic development during this period.
4. Fourth Five-Year Plan (1969-1974):

The plan focused on poverty alleviation and self-reliance.

The nationalization of banks in 1969 aimed at social control over finance and
credit institutions.
5. Fifth Five-Year Plan (1974-1979):

This plan was influenced by the oil crisis of 1973, which led to a focus on
energy conservation and efficiency.
The plan also emphasized employment generation and rural development.
6. Sixth Five-Year Plan (1980-1985):

This plan aimed at accelerating the growth rate, modernizing technology, and
improving living standards.
It marked a shift toward a more open economy and greater integration into the
global market.
 EFFECT OF GLOBALIZATION AND LIBERALIZATION
Globalization and liberalization have had significant effects on India's current
economic model of a mixed economy. These changes represent a departure from
the earlier, more closed and centrally planned economic models. Here's a brief
overview of the effects of globalization and liberalization on the Indian
economy in relation to past economic models:

1. Liberalization (1991 Onwards):

Economic Reforms: The liberalization era, which began in 1991, marked a
departure from the earlier mixed economic models that had a stronger emphasis
on government control and planning.
Trade Liberalization: India opened up its economy to foreign trade by
reducing tariffs and removing many restrictions on imports and exports. This
move aimed to integrate the Indian economy into the global market.
Industrial Deregulation: The government reduced industrial licensing
requirements, allowing for greater private sector participation and foreign direct
investment (FDI) in various industries.

2. Globalization:
Integration into Global Markets: India became more integrated into the global
economy, leading to increased trade and investment flows. This integration has
exposed Indian businesses to global competition and market dynamics.
Information Technology and Services: Globalization facilitated the growth of
India's information technology and services sector. The country became a major
player in the outsourcing industry, contributing significantly to economic
growth.
Financial Liberalization: Financial markets were liberalized, leading to the
establishment of private banks and the entry of foreign financial institutions.
This allowed for greater access to capital and improved financial services.

3. Effects on Economic Growth:

Accelerated Growth: The liberalization and globalization policies contributed
to higher economic growth rates. India experienced more dynamic and
diversified economic expansion, moving away from the slower growth rates of
the earlier planned periods.
Job Creation: The growth of sectors like information technology, services, and
industries attracted foreign investment and created employment opportunities.

The effects of globalization and liberalization on the Indian economy have been
profound. These changes have led to higher economic growth, increased foreign
investment, and greater access to global markets. However, challenges such as
income inequality and vulnerability to global economic fluctuations underscore
the importance of maintaining a balanced approach that combines market forces
with social welfare initiatives—a characteristic feature of India's mixed
economic model.
 POLICY IMPACTS ON DIFFERENT SECTORS
The adoption of a mixed economic system in India has had policy impacts on
various sectors, reflecting the coexistence of both market-oriented and
government-interventionist approaches. Here's an overview of the policy
impacts on different sectors:

1. Agriculture:
Land Reforms: In the early stages of economic planning, land reforms were
initiated to address issues of land distribution and tenancy rights, aiming to
create a more equitable agricultural sector.
Green Revolution: The government played a pivotal role in promoting the
Green Revolution, introducing high-yielding crop varieties, modern farming
techniques, and irrigation facilities to enhance agricultural productivity.

2. Industry:
Industrial Policy: The government has historically played a significant role in
industrial policy, with an emphasis on the public sector's development. The
licensing system, prevalent until economic liberalization in 1991, regulated the
establishment and operation of industries.
Nationalization: Certain key industries, such as banking and coal, were
nationalized in the 1960s and 1970s as part of the mixed economy approach to
ensure public control and equitable distribution of resources.

3. Services:
Public Services: Essential services like healthcare and education have
received government attention, with policies aimed at providing basic services
to all citizens, especially in rural areas.
Information Technology and Outsourcing: The liberalization era has seen the
emergence of the services sector, particularly information technology and
business process outsourcing, which has become a global success story.

4. Banking and Finance:

 Nationalization of Banks: In 1969, major banks were nationalized to achieve
social control and promote financial inclusion. This policy had a significant
impact on shaping the banking sector in India.
Financial Liberalization: Post-1991 economic reforms led to financial
liberalization, allowing for the entry of private and foreign banks. The emphasis
shifted from a regulated financial sector to a more market-driven one.

5. Trade and Commerce:

Import Substitution: In the early years of independence, policies focused on
import substitution, encouraging domestic production to reduce reliance on
foreign goods.
Trade Liberalization: Economic liberalization opened up the economy to
global trade, with policies aimed at reducing tariffs, removing trade barriers,
and encouraging export-oriented growth.

6. Infrastructure:
Public Investment: The government has historically been involved in the
development of critical infrastructure such as transportation, energy, and
telecommunications.
Public-Private Partnerships (PPPs): With economic reforms, there has been a
shift toward involving the private sector in infrastructure development through
PPPs, blending market mechanisms with public initiatives.

7. Social Welfare:
Poverty Alleviation Programs: Various poverty alleviation programs and
employment generation schemes have been implemented to address social
issues and promote inclusive growth.
Education and Healthcare: The government has consistently invested in
education and healthcare to ensure access for all, reflecting a commitment to
social welfare in the mixed economy model.
8. Energy and Environment:
Public Sector Dominance:Historically, the energy sector, including oil and
power, has seen a dominant public sector presence.
 Renewable Energy Policies: Recent policies focus on promoting renewable
energy sources and sustainable practices to address environmental concerns.

In summary, the adoption of a mixed economic system in India has resulted in a

combination of market-oriented policies and government interventions across
various sectors. The policy impacts have evolved over time, responding to
changing economic conditions, global trends, and the need for balancing
economic growth with social welfare objectives.
 COMPARATIVE STUDY OF INDIAN MODEL
India and Russia have historically embraced mixed economic models,
integrating both socialist and capitalist elements. In India, the mixed economy
evolved post-independence, initially focusing on economic planning and
socialism, with subsequent shifts towards market-oriented reforms in the 1990s.
The Indian government plays a significant role in economic planning, social
welfare programs, and key sectors. India actively seeks foreign investment, and
its diverse economy includes significant contributions from services,
agriculture, and industry. Russia, on the other hand, transitioned from a centrally
planned economy to a mixed model post-Soviet Union collapse. The Russian
government maintains a substantial role in strategic sectors, notably energy,
defense, and natural resources. Russia's economy is characterized by a strong
industrial base, with challenges including corruption, bureaucratic
inefficiencies, and regional economic disparities. Both countries face unique
economic challenges, and their mixed economic models reflect distinctive
historical and geopolitical contexts.

CONCLUSION
In conclusion it can be said that the mixed economic system has truly paid off
well for the Indian economy. Providing us with flexibility of options to choose
from and simultaneously providing security for the weaker sections in the form
of social welfare programs from public as well as private players. It has led to the
incorporation of principles of free and fair competition in the private sector and
also government monopoly in sectors where it is deemed necessary. This model
has led to the rapid growth in the Indian economy but still has its own issues to
face, the upcoming economic planning models prioritising a mixed economic
system must address the issues in the current system such as slow decision-
making processes and bureaucratic corruption as well as income divide, regional
disparities. Striking the right balance between government intervention and
market forces remains a continuous challenge for the policy makers in India.
 REFFERENCES
• https://www.drishtiias.com/to-the-points/paper3/five-year-plans
• https://egyankosh.ac.in/bitstream/123456789/19297/1/Unit-3.pdf
• Principles of Economics by Dr. S.R Myneni