MENU
Question -

“Indian policymakers made a mistake by emphasising the role of the state in the economy. India could have developed much better if private sector was allowed a free play right from the beginning”. Give arguments for or against this proposition.



Answer -

No, the above statement is not perfectly true because state’s intervention was mandatory to regulate the country’s economy after independence immediately.

  1. Indian did not follow either the capitalist model of development or socialist completely. Instead, she adopted the model of the mixed economy to be criticised from the right and the left:
  2. Much of the agriculture, trade and industry were left in private hands. The state-controlled key heavy industries, provided industrial infrastructure, regulated trade and made some crucial interventions in agriculture.
  3. A mixed model like this was open to criticism from both the left and the right. Critics argued that the planners refused to provide the private sector with enough space and the stimulus to grow.
  4. The enlarged public sector produced powerful vested interests that created enough hurdles for private capital, especially by way of installing systems of licenses and permits for investment.
  5. Moreover, the state’s policy to restrict the import of goods that could be produced in the domestic market with little or no competition left the private sector with no incentive to improve their products and make them cheaper.
  6. The state-controlled more things that were necessary and this led to inefficiency and corruption.
  7. Then there were critics who thought that the state did not do enough. They pointed out that the state did not spend any significant amount on public education and healthcare.
  8. The state intervened only in those areas where the private sector was not prepared to go. Thus the state helped the private sector to make a profit.
  9. Also, instead of helping the poor, the state intervention ended up creating a new ‘middle class’ that enjoyed the privileges of high salaries without much accountability.
  10. Poverty did not decline substantially during this period; even when the proportion of the poor reduced, their numbers kept going up.

Comment(S)

Show all Coment

Leave a Comment

Free - Previous Years Question Papers
Any questions? Ask us!
NodeJS Interview Questions Answers
ASP.Net Interview Questions Answers
Interview Questions Answers
×