Glossary term
Mixed Economy: Meaning and Definition
Reviewed and approved by Dr. Anamika ShrivastavaPublished Last updated
A mixed economy is an economic system in which the market and the government together decide what to produce, how to produce and for whom. Private property and enterprise coexist with a strong public sector. India chose it after independence to combine the strengths of capitalism and socialism.
In more detail
India’s version gave the state the lead in heavy industry and utilities, regulated private firms through licensing, and left farming and small trade largely private. Since 1991 the balance has shifted towards markets, but the government still provides defence, public goods and social services.
Example
In India the government runs railways and defence, private firms run most shops and many factories, and some goods are produced by both.
Key points
- Private and public sectors coexist.
- Government provides what the market fails to.
- India adopted it with planning in 1950.
Common mistake
Thinking a mixed economy means half the sectors are state-run.
Related terms
Where it is explained
This term is explained in Class 11 Indian Economic Development Chapter 2: Indian Economy 1950-1990.