What is the meaning of a ''Mixed Economy''?

Question

What is the meaning of a ''Mixed Economy''?

1. A. Traditional and modern industries
2. B. Both the public and private sectors are involved (Correct answer)
3. C. Involvement of both foreign and domestic investors
4. D. Subsistence and commercial farming

Correct Answer

Option B — Both the public and private sectors are involved

Detailed Solution & Explanation

The correct answer is Both the public and private sectors are involved.

Key Points

• A Mixed Economy combines both public sector (government ownership and planning) and private sector (market-driven) activities.
• India is an example of a mixed economy.

Additional Information

• A mixed economy combines private enterprise with public ownership and planning; India adopted one after independence, formalised in the Industrial Policy Resolutions of 1948 and 1956.
• The alternatives are a capitalist (market) economy, where private ownership and prices decide allocation, and a socialist (command) economy, where the state does.
• India's balance shifted sharply with the 1991 liberalisation, which reduced licensing, opened trade and expanded the private sector's role.
• The Constitution's Directive Principles — particularly Articles 38 and 39 — underpin the state's economic role.