Which of the following was a defining feature of India’s mixed economy model during the Five Year Plan period?
Show answer & explanation
Correct answer: C
Explanation
Correct Answer: The co-existence of the public sector with a regulated private sector.
Explanation:
- Mixed Economy: After independence, India adopted the 'Mixed Economy' model. This refers to an economic system in which both the Public Sector and the Private Sector operate side-by-side.
- Characteristics: Under this model, the government retained control over basic and heavy industries (such as iron, steel, and power), while consumer goods and other sectors were opened up to private companies; however, these were regulated under government rules and licensing requirements (the 'License Raj').
- Five-Year Plans: Notably, the Second Five-Year Plan (1956–61)—which was based on the 'Mahalanobis Model'—further strengthened the role of the public sector and emphasized the development of heavy industries.
Key Pillars of India's Economic Model:
- Dominance of the Public Sector: The ownership and management of critical industries rested with the government.
- Planned Development: The country's resources were utilized through Five-Year Plans formulated by the 'Planning Commission' (now NITI Aayog).
- Control over the Private Sector: Obtaining permission or a license from the government was mandatory for the expansion of private industries.
Important Questions for Upcoming Examinations:
- Question: Which Five-Year Plan laid the foundation for 'industrialization' in India?
- Answer: The Second Five-Year Plan (1956–61).
- Question: In which year did India liberalize its economy through the 'New Economic Policy' (LPG Reforms)?
- Answer: 1991.
- Question: When was the 'Planning Commission' replaced by 'NITI Aayog'?
- Answer: January 1, 2015.