Economic System of the World and India

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Economic System of the World and India
Introduction Economic system or economic order is
a set up according to which societies and
government organizes means of production,
resource allocation and distribution of goods
and services to the society or a given
geographical area. Indian economic system is an
example of the mixed economic system. Economic
System of the world Economic system of the world
can be broadly classified into the following 3
categories 1. Capitalistic Economic System
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• Socialistic Economic System
• Mixed Economic System
• Capitalistic Economic System
• Capitalist Economic System is also known as
  Laissez- faire, means leave me alone. (Name
  given by Merchandise class).
• It is also called Marketed Economic System.
• In this system, the Means of Productions are
  owned by Private individuals.
• Market Forces (i.e., Demand and Supply) play
  vital role.
• Consumer is in powerful condition (King Like
• condition) in this system.
• Democracy is Stronger under this system.
• Criticism
• Centralization of Capital
• Possibility of negligence of Public Welfare
• Possibility of Class Conflict between
  industries and labourers as their interests are
  different.
• Sometimes Inflation, Unemployment and Recession
  like macro-Economic challenges become serious.
• Socialistic Economic System

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• Under Socialist Economic system, Means of
  Production, distribution and price determination
  is controlled by the Government.
• This system is based upon the ideology of Social-
  Justice and Equality.
• Since the system is too much controlled therefore
  it is not much popular and is adopted by very
  few countries of the world. i.e., China, Cuba,
  North Korea, etc.
• Mixed-Economic System
• In Mixed-Economic system, both Public Sector and
  Private Sector run side by side.
• Generally Public Welfare production activity is
  controlled by the Government (i.e., Education,
  Health, etc) while the production of Consumer
  Goods is handed to Private Sector.
• Indian Economic System
• Indian economic system is divided into 2 phases
  1. 1948 1990
• 2. 1990 to till now
• During first phase Government policies were
  oriented towards Socialistic views because
  Government was

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concerned about Centralisation of Capital,
therefore strict rules and regulations were
adopted. The year 1990 was the year of Economic
Crisis for India, that took place for the first
time after Independence and it was the crisis of
foreign currency (i.e., Balance of Payment (BOP)
crisis) In order to control the situation, in
1991 comprehensive economic reforms were
started, which was popularly known as LPG
reforms. (Liberalisation, Privatization,
Globalisation) and it is still going on. As a
result the element of market become dominant in
Indian Economy and Mixed Economic system has been
somewhat changed and it could be better
expressed as Market Oriented-Planned Mixed
economic system. Explore more about subjects and
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