The following points highlight the top seven features of Indian economy being a mixed economy. The features are: 1. Co-Existence of Public and Private Sector 2. Role of Market Mechanism 3. Public Sector Participation for Giant Industries 4. Government Control and Regulation of Private Sector 5. Economic Planning 6. Control of Monopoly 7. Reduction of Economic Inequalities.

Feature # 1. Co-Existence of Public and Private Sector:

Co-existence of large public sector along with free enterprises under private sector has transformed the economy into a mixed one. Industrial Policy, 1948 and 1956 formulated by the Government of India has made provision for such co-existence. Some strategic basic and heavy industries are being run under the public sector.

Moreover, there is a huge private sector under which a good number of industries are being managed from the very beginning. These industries include cotton textiles, jute, sugar, vegetable oil, cement, food processing, leather etc. Moreover, with the liberalisation of Indian economy, the scope of private sector has further enhanced.

Feature # 2. Role of Market Mechanism:

In India, market mechanism has been playing a predominant role. Prices of various commodities are determined by market forces, future expectations etc. But the market mechanism in India is again not completely free from state control. Industries (Development and Regulation) Act, 1951 has introduced a regulatory system for the industrial activity of the country.


Besides, the government has introduced certain controls and incentive measures for influencing the market decision. These include— budgetary measures, import controls, establishment of fair price shops for the distribution of essential commodities at reasonable prices, purchase of agricultural commodities by the government at minimum support prices.

Feature # 3. Public Sector Participation for Giant Industries:

Just after independence, as the country was suffering from low level of investment, backward infrastructural facilities, poor rate of industrialisation etc. thus the country was suffering from low level equilibrium trap. In order to rescue the economy from such low level equilibrium trap, the intervention of the state in industrial activity was imperative.

Accordingly, a good number of public sector enterprises has been developed to run, some basic and heavy industries, transport system, energy projects etc. particularly after the introduction of Industrial Policy, 1956. Public enterprises at present constitute a major national capability in terms of their scale of operations, coverage of the national economy, technological capabilities and stock of human capital.

Around 50 per cent investments were made in the State sector during the last four and a half decades. Presence of such a giant public sector has not made any significant deviation in the character of the economy rather it has converted the economy into a mixed economy which is basically a variant of capitalistic economy.

Feature # 4. Government Control and Regulation of Private Sector:


In India, the private sector, which is managing the big segment of industrial sector, is not totally free in its operation. The government started to control and regulate the private sector since independence through its various industrial, monetary and fiscal policies.

Licensing system which was introduced as an instrument of investment and output during the first decade of economic planning has been gradually liberalised particularly after the introduction of Industrial Policy, 1991 through its clause of delicensing under the present regime of economic reforms.

Thus in a mixed economy like India, the government controls and regulates the private sector exclusively in the interest of the nation.

Feature # 5. Economic Planning:

Adoption of economic planning by Indian economy has been considered as one of the important characteristics of a mixed economy.


Although planned economies are sometimes mistakenly characterised as socialist economies but it is a common characteristic of both socialist and mixed economy retaining its capitalistic structure. In India, economic planning has been adopted since last six decades in a basically capitalistic economic framework.

Moreover, economic planning in India has covered both the public as well as the private sector. In Indian planning, there is no compulsion rather it laid down some targets for all the important sectors and tries to achieve those targets.

Charles Bettlcheim in this connection observed, “Indian plans attempt to define as precisely as possible the government’s agricultural, economic and industrial policies for the following five years. The government and its administration naturally want to fulfill as much of the plan as possible, but they may adopt measures very different to those suggested by the original plan without violating any legal obligations.”

Thus economic planning as implemented in India during last six decades is guided mainly by the objectives of attaining higher rate of economic growth, employment generation, poverty alleviation along with other objectives but not to alter the basic character of the economy of the country.

Feature # 6. Control of Monopoly:

Controlling monopoly trade is one of the characteristic features of mixed economy. In India, monopoly houses have grown in its size and capacity rapidly since independence. Monopoly Enquiry Commission in its report observed that in 1963-64, 75 big business houses of the country has controlled 44 per cent (Rs 2,606 crore) of the total paid up capital of all non-government and non-banking companies.

In order to control such concentration of economic power into a few hands, the government has enacted the Monopolies Restrictive Trade Practices (MRTP) Act, 1969. Inspite of that, the government has not been able to contain the growth of assets of such big business houses. At the end of December 1992, Tata and Birla have gained the control over capital assets to the extent of Rs 8.531 crore and Rs 8,473 crore respectively.

Feature # 7. Reduction of Economic Inequalities:

Economic inequalities are the characteristic features of capitalistic economy. Inequalities in the distribution of income and wealth of the extreme degree are economically harmful, socially unjust and politically undesirable. Extreme inequalities reduce social welfare and generate class-conflicts.

Indian economy being a mixed economy has undertaken various measures for the reduction of economic inequalities in the distribution of income and wealth. In this direction, the Government has imposed direct taxes at progressive rates through income tax, tax on capital gains, wealth tax, death duties, gift tax etc.

Again in order to provide necessary support to the poorer sections of the society, the Government has undertaken various welfare measures like free medical facilities, free education, old age pensions, widow pensions along with other poverty alleviation programmes. But in spite of all these, mixed economic framework in India has accentuated economic inequalities.


Thus we have seen that most of the important characteristics of mixed economy are almost common to Indian economy. The mixed economic framework of Indian economy has proved its ability to attain a modest rate of economic growth and a higher rate of savings and capital formation. Thus India has rightly adopted the mixed economic framework since independence.

In this connection, Prof. Sukhamoy Chakroborty has rightly observed thatadherence to a mixed economy does not imply that it will grow into what many people once thought to be its rationale, i.e., a socialist pattern of society. In fact, a mixed economy is an unstable blend of different features, which is dynamically compatible with different outcomes. Which outcome finally prevails depends on a changing balance of social forces and also on the ability of the political processes to find corridors of action.