Question

What is mixed economy?

Hint:

Remember: \textbf{Market + State = Mixed Economy}. Market gives efficiency; State ensures equity and public goods.

Answer 1

Step 1: Core definition.
A mixed economy is an economic system in which both the public sector (government) and the private sector (individuals/firms) co-exist and coordinate in production, distribution and exchange.
Step 2: Dual mechanism.
Decision-making uses a price mechanism (market forces) for many goods & services, while the government uses planning/regulation for strategic sectors (e.g., infrastructure, defense, social services).
Step 3: Objectives.
The system aims to balance efficiency (through competition) with equity & welfare (through state intervention, subsidies, safety nets).
Step 4: Instruments of the state.
Public enterprises, taxation, subsidies, price controls, and welfare programs are used to correct market failures and reduce inequalities.
Step 5: Examples.
India (especially post-1991 reforms) — private sector–led growth with government roles in regulation, social sectors, and public goods.
Step 6: Conclusion.
Thus, a mixed economy combines market freedom with state guidance to achieve growth with social justice.