Why did India adopt a mixed economy model for the attainment of social and economic development?
The socio-economic condition of India after Independence was such that it was impossible for either public or private sector to carry on the responsibility of development solely. Planning was foremost requirement to deal with the problems of 100 per capita income, major portion of population engaged in primary sector, high birth rate, grave unemployment and low capital formation, unequal distribution of wealth, illiteracy, lack of technical knowledge, poor quality of human resources etc. so it became important to adopt an economic system which could bring about growth conducive or in relation to the prevailing environment.
The community of feudal lords, land owners, merchants, financiers and industrialists did not have the capability of discharging the essential task of development. The private sector was not even so strong to carry on the responsibility of development because it required heavy investment to produce consumer goods on large scale. Also, even in the British period the key sectors of the economy were state owned. Thus, mixed economy became the most appropriate model to be adopted.
In a country like India where development was yet to start, the state have more responsibility as it is expected to create the conditions for development. The Indian planners also had limitations of public sector in their mind and the strengths of private sector.
Hence, neither the public sector was made all embracing nor the private sector was reduced to non-significance. A well defined rule was assigned to the private sector under the Directive Principles of State Policy, where it is clearly spelled that the state should strive to promote the welfare of the people by securing and protecting as effectively as it may, the social order in which justice, social, economic and political shall inform all the institutions of national life.
Thus, to protect the weaker section of society but not at the cost of the capable ones and to create conditions of economic and social development, a mixed economic model was required where state could play a major guiding role and private enterprise act as important means to achieve the developmental goals.