The Mixed Economy

UNIT 9 THE MIXED ECONOMY MODEL Model

Structure

9.0 Objectives
9.1 Introduction
9.2 Rationale for Government Intervention in the Economy
9.3 The Mixed Economy
9.4 Evaluating the Mixed Economy
9.5 Impact of Economic Reforms
9.6 Activity
9.7 Conclusion
9.8 References and Further Readings

9.0 OBJECTIVES

This unit aims at familiarising you with various alternative development

strategies, and takes up for discussion one particular strategy or model of
development, the mixed economy model. After going through the unit, you
should be able to:

• Define the mixed economy;

• Describe the development strategy in India;
• Discuss the merits and demerits of the state and the market in economic
activity; and
• Analyse the need for and performance of economic reforms.

9.1 INTRODUCTION

Every nation embarking on a development process has to choose the framework

and policy measures which will help it to obtain maximum benefits. Howsoever,
we may define development; there is no gain saying the fact that the economy
has to be given a structure.

Ever since the industrial revolution in England and Western Europe and then
elsewhere, the world has seen a new epoch and era of modern economic growth
characterised by modern technology, new inventions and levels and rates of
growth in Gross Incomes of nations which had never before been reached in
human history. It was widely held that this growth engine was zooming at
dizzying speed levels due to capitalist mode of production, with free markets and
risk-taking by entrepreneurs, the ‘captains of industry’. Also, thinkers like Adam
Smith, in his classic book “An Inquiry into the Nature and Causes of the Wealth
of Nations” published in 1776, extolled the virtue of the ‘invisible hand’.
According to this principle, people, while attempting to serve their own self-
interest in a free enterprise economy are led, as if by an invisible hand, to confer
benefits to others, even though it may not have been part of their original
intention. Adam Smith also talked of the natural prosperity of people to truck,
barter and exchange. This exchange process, whether of commodities or labour
or finance or intellectual capital, whereby both buyers and sellers are involved in
the exchange, is supposed to lead to gains for both. The sum total of all these
exchanges is described in the abstract as a market economy. Of course, in the
modern era virtually all exchanges are carried out with the help of the universal
medium of exchange, money. 105
Development Planning Ever since the market economy has been in ascendance, there have been its
and Administration
critics too. Apart from socialists of all hues, others too have urged the
intervention of the state in the economy to stabilise the economy, or to provide
welfare measure, or to mitigate the adverse effects of the pure market economy.

In this unit, we shall be concerned with the role that the state and the market can
play in an economy and the various arrangements in support of each and the
possible relationship between the two.

9.2 RATIONALE FOR GOVERNMENT

SINTERVENTION IN THE ECONOMY

In the developed countries, ever since the Depression of the early 1930s, when
national output fell, stock markets plummeted, unemployment soared, and banks
and financial institutions failed, a large role has been envisaged for the
government to stabilise the in-built fluctuations of market economics. Also, in
many nations, there has been an expansion of welfare activities of the
government such as unemployment insurance, subsidies in agriculture and health
programmes for the poor and the elderly.

Role of the Government

The government has many different kinds of functions. Apart from providing the
legal framework and enforcing contracts, the government has been seen to be
performing four broad types of functions.

(1) Stabilisation function:

This has been mentioned above. From time to time market economies face
problems of rising unemployment or inflation or both, apart from benefits in the
balance of payment in the international economy. The government steps in with
corrective measures and policy guidance to steer the economy back on the growth
path. The government may take steps through the budget, or through interest rates
or through money supply or policies on the external sector, such as devaluation of
the national currency. Stabilisation functions pertain to the overall, that is, macro
level of the economy.

(2) Budgetary Function:

This may sometimes be an instrument of stabilisation, but even when stabilisation

of the economy is not required, the government does have to have a policy about
how much to spend and on what and to determine where the money is going to
come from. Thus, the government has to form policies about current and long-term
expenditure and about receipts such as revenue from public enterprises, taxation,
etc. It also has to determine how much deficits to be seen in its budget, if at all.
These policies of the government are known as fiscal policies.

In many ways, budgetary measures and policies pervade all government

activities. Whatever activities the government undertakes, it is going to need
finance. Thus, public financial or fiscal aspects are the overarching activity of the
106 government.
(3) Allocation Function: The Mixed Economy
Model

There are certain goods called public goods or social goods, which are not
efficiently provided by the private sector. Public goods are goods where there is
an absence of rivalry in the consumption of these goods, and it is not feasible to
exclude some people from the consumption of these goods. An example is
national security. Another example could be a public health care measure like
public immunisation programme. The need of these goods is felt collectively as
such so that unlike private goods, the market mechanism, which is based on the
principle of exchange, does not do a good job of providing these. The nature of
public goods is elaborated below.

Related to the case of public goods is the situation of what is known as market
failure.

‘Market failure’ is the collective situation where competitive conditions do not

prevail in the market economy or the exchange process is not smooth. This
subsumes several situations:

(i) Absence or breakdown of competition: This is a situation when one or

a few firms control the market in some industry. This means competition
is not strong, especially if there are not even potential entrants.
Monopolies or oligopolies prevail in such situations;
(ii) Public goods: These have been discussed above. What are their
characters? First, it is difficult or impossible to exclude individuals from
consuming it. Consider a lighthouse at a harbour. If one ship gets the
benefit of the lighthouse, it is difficult to exclude other ships form
getting the light. This is called the principle of non-exclusion. The other
characteristic is called non-rivalry. This means that if one person
consumes a certain quantity of the good, the quantity left over for others
is not diminished. For example, consider a group of people trying to
warm themselves on a winter night by huddling around a fire. If another
person comes by, the amount left over by these people is not diminished.
Related to this characteristic of non-rivalry is the fact that the additional
cost or cost at the margin of providing the good does not go up if the
number of people to whom this good is to be provided goes up. A classic
example of a public good is national defence. It is difficult to exclude
some people and include others on defence against external aggression.
Similarly, the costs of defending a population do not go up if more and
more people are added. Usually, the markets will under-supply these
goods and the government has to step in to provide these goods and
services or even to produce.
(iii) Externalities: These are situations where the action of one individual or
a firm affects others adversely but this individual or firm does not bear
the cost or alternatively the action may confer benefits to others but the
individual or the firm does not receive rewards or compensation for
conferring this benefit. The former is a situation of negative externalities
and the latter is called positive externalities. An example of negative
externalities is pollution. A positive externality situation would if a
person has an apple orchard and provides nectar for the bees of a
neighbouring beekeeper. 107
Development Planning It is sometimes felt that the government has to step in to control externalities either
and Administration
through legislation such as pollution norms, or through taxes and subsidies.

The other roles of the government are as the producer of goods and services,
particularly pure public goods. The government even when not directly engaged in
production, can provide incentives through subsidies and prices. The government
also regulates business and the private sector in may areas. In many financial
markets where there are imperfect information or the markets are not complete, the
government provides credit and insurance.

(4) Distribution function:

The government has policies for the redistribution of income. It does so through
the taxation system and through direct redistribution of welfare programme. The
government may have special income generation programmes for the indigent.
Taxes and subsidies, suitably targeted are important instruments for this function.

9.3 THE MIXED ECONOMY

Background

After the Second World War, several developing nations got freedom from
colonial domination. They had to decide on a development strategy. For several
reasons most of them chose a development strategy where the state had a very
important role to play. First, most of these countries had gone through over a
century of colonial rule so that by the time they got their independence, the
private sector was not developed enough or mature enough to undertake massive
investment – often in sectors with no immediate scope for profits on a scale that
the development process seemed to require. The state had to step in. Secondly,
just about each of the developing nations, apart from having a low national
income per head (that is, the average income per person was low) had a highly
skewed income distribution, that is, there were islands of riches with large pools
of poverty. There were also high unemployment levels. The market, it was felt,
could not only not lift the poor out of poverty, but would actually be unjust to
people living near subsistence level. Therefore, it was thought that the state had
very important role to play. Thirdly, during the Second World War, widespread
use was made of control and rationing with administrative consideration taking
precedence over market logic in resource allocation. Even after independence,
most of these countries continued with controls and regulation in several areas of
the economy. Further beginning 1929 and through much of the 1930s, several
industrial economies experienced a severe depression when joblessness was
rampant and national income not only slowed down in growth, but levels of
national income actually fell. The state stepped in a big way in these countries to
attempt to cure these problems though massive government expenditures. The
theories of the economist John Maynard Keynes advocating state intervention to
stabilise the economy were put into practical policy formulation. Moreover, the
state stepped in with several welfare measures like social security and insurance.
In the U.S.A., President Roosevelt put this package into operation under the
name “The New Deal”. At the same time that the West was experiencing
depression and unemployment, the then Soviet Union was industrialising at a
very fast rate. The country, which was a backward agricultural economy not long
108 ago, was undergoing a transformation at a pace that was the envy of all.
What the industrial western world had taken centuries to achieve, the Soviet The Mixed Economy
Model
Union, or so it seemed, would achieve in decades. Social welfare measures were
also not neglected. All these impressed policy makers in the developing nations.
A final reason for adopting a developing strategy with a large role for the state
seem to be the thinking, widespread at that time was that social science theories,
particularly economic theories developed in the west and apparently for the west
were largely inapplicable in poor nations. These countries were thought to
possess unique social, economic and political features, which rendered western
social science useless.

Thus, it was that developing countries embarked on a development strategy that

envisaged a large, often dominant, role for the state. This mix of the state and
private sector was very broadly, what came to be, called the mixed economy. We
still elaborate on it’s meaning a little later and discuss its rationale and the merits
and demerits of the system. Here we make a small point.

The preceding discussion, and the discussions about the Indian economy before
the reforms in 1991 that you must have come across in the media, has probably
made you think that the mixed economy is a strategy for development or a model
adopted exclusively in the developing nation. Not so. Economists like Paul
Samuelson and Joseph Stiglitz, both Noble Prize winners, have described the
American economy as a mixed economy, in their textbooks. Stiglitz, for
example, claims that in the American economy, the state, and many by the
private sector undertake lots of economic activities. Moreover, the state
influences the behaviour of the private sector by employing a variety of
instruments like regulation, taxes and subsidies.

We saw above that the western countries have many welfare oriented policy
programmes. For example, Americans had Mediclaim and Medicare policies for
providing subsidised health services and health insurance for the poor and old
people. Similarly, government expenditure forms a large portion of total national
spending. This was even truer of countries like Sweden and Britain in the 1950s
to 1970s. Of course, since the 1980s the welfare state has been under attack from
critics -- and indeed the state has been in retreat in developed countries as also in
developing countries. We will come to this aspect presently.

The second point to remember is that mixed economy does not mean a mix
between socialism and capitalism. Although many developing countries that
adopted the mixed economy had central planning as well- functioning markets,
these were essentially market economies with a role for the state, including that
of regulation.

What then is a mixed economy?

A mixed economy does not mean merely a mix of planning and the market, or
merely a mix of bureaucracy and private business firms, but the notion is used to
denote an economic system characterised by a mix of private enterprises and
government owned enterprises. A mixed economy is characterised by the
coexistence of private ownership and state ownership of the means of production.
The state, apart from ownership of means of production, often had a regulatory
role.

The Mixed Economy Model in India

India’s principal economic strategy was given a blueprint in the Second five-year
Plan. The first Five Year Plan was over the period of 1951-1956. It was mainly a 109
Development Planning collection of projects, like irrigation projects. By the time, the second five -Year
and Administration
Plans came along; the planners decided that the fundamental objectives of any
planning exercise had to be growth of national income on a sustained basis.
There did exist rich farmers and rich people in other walks of life but it was felt
that in a democratic society, there were limits to any distribution of wealth and
income that could be carried out. Moreover, the quantum of wealth that would be
released would be insufficient to better the lives of the teeming millions. So the
form had to be growth, and it was hoped that the benefits of growth could trickle
down to the people in low socio-economic status. Economist Jagdish Bhagwati
has opined that the strategy should be called a ‘pulling up’ rather than ‘trickle
down’ because it was hoped that the poor would be pulled up in a participative
manner in the growth process, and would not merely be expected to passively
wait for the benefits to come to them.

The policy makers saw in capital accumulation the main source of growth.
Capital here does not mean financial capital. It means machines, plants, and
means of production. There are broadly two types of machines, when looked at
from the economic angle. One type is that of those machines, which produce
goods that consumers will buy. The other type consists of those machines, which
produce machines that will in turn produce consumer goods. Industries procuring
the former type of machines are called light industries, and those producing the
latter type are called heavy industries. It was thought important in the strategy of
the second Five Year Plan (the principal architect of the plan model was P.C.
Mahoalanobis, and hence the strategy is called Mahalanobis strategy) that there
should be investment in heavy industries. Investment here means net addition to
the capital stock. Here it does not mean an individual spending money to buy
financial assets like shares or mutual fund. It means an aggregate economy level
addition to the stock of machine, plants, equipment, etc.,

Now for a machine investment of this magnitude, it was felt that the private
sector at the time was simply not in a position to undertake it. Moreover,
investment in these and infrastructure involved a considerable lag after which
profits would start to flow. Indian private capitalists, who were mostly in trade,
finance and speculation activities, it was felt would not be interested. Thus, the
public sector had to step in, invest machinery in heavy industries and
infrastructure, in fact, to ensure ownership of these industries and occupy the
commanding heights of the economy. Also many of these industries were of a
strategic nature like Power, Defence, and, thus, for the strategic reasons also it
was thought improper for these to be left to the private sector.

There was another plank to the strategy. It was felt that dependence on imports
for all type of goods had to be lessened. Foreign exchange was a scarce item,
which had to be conserved and not given away to obtain imports. Thus, an
important substitution strategy was put into place. Also, it was felt that sufficient
scope of experts did not exist and hence an export promotion strategy was not put
into place.

Thus, in India the public sector was given charge of the heavy industries,
infrastructure, dams, etc. State owned means of production and other state owned
firms were guided by an objective of the promotion of social welfare. The private
sector was allowed in areas of consumer goods and in areas where economics of
scale were not present or important. Big business was tolerated in areas where
they could foster technical advance and raise technological capacity. Moreover,
the state sought to regulate the private sector through a system of incurring in
order to prevent build-up of monopolies and unfair business practices.
110
Thus, the main areas of state interventions were in the industrial sector. So the The Mixed Economy
Model
mixed economy meant, first, a pervasive role of planning along with market
forces, and second, state ownership of the means of production and regulation of
private industries. The primary instruments for these were (1) the Industrial
Policy Resolution of 1948, and more crucially of 1956 which sought to
demarcate areas of private and public industries; and (2) the Industries
(development and regulation) Act, 1951 (IDRA), which established the elaborate
licensing framework by which the state sought to regulate the private industrial
sector.

Agriculture was left totally in the private sector, and there was indirect policy
support through investment by the state rather than ownership. The state sought
to provide public investment support in key area such as irrigation, research, and
extension.

Apart from controls in the industrial area, there were other controls such as
(i) price controls; (ii) controls on exports and imports; (iii) controls on capital
finance (here it means investment, say in stock exchanges issues); (iv) controls
on foreign collaboration and exchange; (v) distribution controls such as in food
grains; and (vi) controls in labour polices for example ability to fire and in
location

Over time, the government resorted to not merely regulating the private sector
but also nationalising, or taking over certain industries like the Burn Standard
Iron and Steel company or even banks such as the nationalisation of 14
commercial banks in 1969 and then a further six in 1980. Nationalisation was
done both in the name of fighting inefficiency in industries (so that workers’
interests were protected) and also when it was felt that these was not acting in the
social interests and the deprived social classes were not being served. The
government also took recourse to statutorily rationing certain items such as food
grains and some other essentials like sugar and kerosene. Finally, there was an
elaborate network of subsidies given to various purposes and to several sectors in
the economy.

The state adopted logic of planning largely for co-ordinating large-scale

investment in the heavy industries and key sectors of the economy. The state was
assigned a leading role in investment. A complex and elaborate system of
controls and regulatory instruments were created which aimed at consuming
foreign exchange and preventing growth of monopoly homes.

Along with these, the state took a policy of fostering small and medium
industries, handicrafts, as well as promotion of co-operatives. The state also
adopted a regime of administered prices to regulate the inequities of the market
system, and to promote stability in the economy. Other than this, the state had a
policy to regulate the inflow of private foreign capital while relying on official
development assistance from foreign government and multilateral agencies to
cover foreign exchange gap and sometimes even budget deficits.

Many economists and policy makers have put forward arguments that just
because markets some times fail, state intervention and control need not be the
solution. In fact, the economic activities of the state are beset with problems. The
collective term for all the limitations and pathologic of state activities is
government failure.

What are the problems with government activities, and what limitations does the
state have in implementing its policies? Firstly, there are millions of transactions 111
Development Planning taking place, innumerable production activities going on. The state just cannot
and Administration
have information of all to formulate a consistent plan model, which will have an
impact on the entire economy. The state has limited information and so is
constrained in policy matters. Second, the state has limited control over private
market responses. For example, the state can channel investment into key areas
and desired sectors, but how does it control private consumption? If consumers
show a preference for luxury consumption and do not buy handicrafts, then the
state, particularly a democratic one, has little policy option to regulate
consumption. Similarly, if for investment, the state feels that there should be a
certain level of savings but if the people show low saving propensities then the
following exercise is to that extent compromised.

Third, government policies are implemented though administrative bureaucracy.

The policy makers, however, have very loose control over bureaucrats and
government officials. Not only the reach and power of the bureaucracy grow, but
individual officials may not honestly and efficiently implement the stated policy
or programme, assuming that the policy or the programme itself is intrinsically
sound.

Finally, the government faces limitations thrown up by the democratic process

itself. In the economy, there are innumerable economic agents. The government
has to find ways of aggregating in a democratic manner their diverse individual
preferences. The government also has to balance the interests and demands of
various pressure groups/ interest groups that unnecessarily emerge in large,
heterogeneous and plural societies.

9.4 EVALUATING THE MIXED ECONOMY

The mixed economy model that was put into operation around the mid fifties
continued in more or less the same manner till about the 1980s. By the time the
1980s arrived, there was thinking in several industrial nations that there was a
need to reduce the role of government in economic affairs; a greater role was
sought for the private sector and markets. Similar thinking started taking place in
India and other developing nations as well. China of course, had started reforms
in 1978.

How successful was the model? We place the discussion in this section in the
context of India. What do we understand by success in this context? Should we
judge the mixed economy against the background of the stated objectives? What
were the basic objectives?

Objectives of the Mixed Economy

Given the fact that India has been a country with a low per capita level and a
large mass of poor, landless, unemployed, the basic objective of the mixed
economy has always been fostering growth along with social justice. The
strategy adopted for fostering growth has been described in the previous section.
For social justice, there were attempted land reforms, and since the late 1960s
direct employment generation and poverty alleviation programmes, apart from a
minimum needs programme which attempted to provide basic needs like
sanitation, drinking water and so on.

As far as plans were concerned, subsequent plans were more or less in the same as
the Mahalanobis model. But some inherent crises and contradictions soon
112 appeared. The stress on heavy industrialisation and import substitution,
paradoxically led to a situation where it was realised that machinery and capital The Mixed Economy
Model
goods of the manufacture of heavy industries themselves had to be imported. This
led to a foreign exchange crisis, and the Rupee had to be developed in 1966.
Moreover, unlike some other Asian countries at that time, India did not seek ways
of integrating with the international economy and of promoting exports.

Technological aspects of agriculture were not given due attention till about the
mid 1960s. The land reforms programme too, was of little success, and there
seemed to be little political will in implementing them. By the middle of the
1960s, a technological package was implemented in agriculture, with high
yielding variety of seeds, particularly in wheat, along with complimentary inputs.
This programme, which came to be called the ‘green revolution’, eventually
proved to be a success and helped the nation become self sufficient in food
grains. The programme, of course, had its shortcomings. It led to the worsening
of the distribution of rural income and deterioration of the soil quality.

Other problems emerged as well in course of the operation of the mixed

economy like concentration of economic power, dismal performance of the
public sector enterprises, and very poor levels of social indicators like education
and health.

Let us now list some of the major achievements of the model.

First, the economy emerged from colonial rule and managed to attain a
respectable growth rate. For the period till the mid 1980s, the rate of growth of
population was lower than the rate of growth of Gross National Product. For a
large section of the people, there was a perceptive rise in living standards.

Second, India managed to create a large diversified industrial structure. Before

independence the main industries worth mentioning were iron and steel and
textiles. After independence the pattern of industrialisation diversified and
industries in many sectors developed.

Third, India, which used to rely on food aid and food imports, became
self-sufficient in food. There were distribution problems, which led to the
contribution of endemic hunger among some sections of the people.

Fourth, Indian education policy was a lopsided one with stress on tertiary
education. This, however, resulted in the development of a large scientific human
resources pool. India made great strides in atomic energy, space and other
scientific areas. By the 1980s India had the world’s fourth largest scientific
human resource pool. While this large pool often was not productively employed
in the country and there was a ‘brain drain’ to other countries, there was the
creation of the ‘brain’ in the first place.

Finally, the pervasive influence of the state in almost spheres of economic

activity buffeted the economy from fluctuations.

9.5 IMPACT OF ECONOMIC REFORMS

We have mentioned about the performance of the mixed economy. We have also
talked about government failure. The strangulating effect of government
regulation, the effect of government regulation, the dismal performance, by
public enterprises, and the difficulties at the macro economic level such as
growing balance of payment gaps or burgeoning budget deficits, led many 113
Development Planning countries across the globe beginning in the mid to late seventies to roll back the
and Administration
government and attempt to integrate more with the global economy.

Many Latin American countries, due to balance of payment difficulties, took

recourse to loan from international agencies like IMF in the mid 1970s. These
loans came attached with conditionalities, most of which involved a liberalising
package. On the other hand, with the coming to power of Deng Ziao Ping in
China, 1978, wide-ranging reforms were launched in China beginning in the
agricultural sector. In the 1980s Western nations, too, saw a retreat of the state,
particularly in Britain and America. When Mrs. Thatcher and Mr. Reagan
assumed office, there was a different shift to policies, which involved a smaller
role of government. Finally there was the collapse of ‘actually existing socialism’
in the erstwhile Soviet Union and East European nations by 1998.

Then through the 1980s a climate was getting created in the international
economy that the government should restrict its role to providing a few services,
there should be minimal regulation, and a greater role for inputs, experts and
foreign investment to boost the economy.

The situation in India

Since 1980 there have been some small attempts at reforms, particularly in
allowing private firms entry into areas till then received of by the public sector.
In1980 a new industrial policy resolution was passed. In 1985 there were some
liberalisation in the external side with lowering of custom duties in the case of
several items. Also, there was massive lowering of tax rates and simplification of
taxation principles. Imports of inputs for manufacturing of products particularly
in electronics and two wheelers were eased. Eminent economist Jagadish
Bhagwati has described this package, which was then called ‘new economic
policy’, as ‘reforms by strength’.

The Indian economy grew at a high rate through the 1980s but by 1990, it was
realised that this was made possible by running huge deficits in the budget. Also,
there was a crisis in the external front with high balance of payments deficits and
low foreign exchange reserves. Thus, India had to go in for a massive loan from
the IMF. As a result of this, certain measures were taken as part of the
conditionalities. The rupee was devalued and industrial licensing was all but
abolished.

Gradually, the reform process gathered momentum and later reform measures
were taken in the financial sector such an abolition of the controller of capital
issues. In its place, Security Exchange Board of India (SEBI) was established.
Later other measures related to banking and finance was taken. More recently the
government has taken some steps towards privatisation and disinvestments of
public enterprises. What are now needed are reforms in labour laws and the
agricultural sector.

9.6 ACTIVITY

1. Discuss the role of public sector banks, and do a comparative analysis of a

public sector and a private sector commercial bank, using suitable indicators.
2. Contrast the objectives and functioning of a private firm and a public
114 enterprise in your country.
 The Mixed Economy
9.7 CONCLUSION Model

This unit attempted to discuss the rationale for, and the role of, the government in
economic development. It discussed the mix of planning and the market as well
as the mix of the public and private and public sectors in developed nations, but
more so in developing nations. In discussing the role of government, it discussed
the allocation, distribution and the stabilisation functions. The unit also discussed
the budgetary aspects of government activities. The unit then went on to discuss
market failure, and described how the government can step in to correct market
failure.

The unit discussed the modern notion that governments, too, can fail. It traced
the evolution of the mixed economy in developed nations, as also the strategy of
mixed economy and its efficacy in developing countries. The unit provided an
evaluation of the mixed economy and the shortcomings and weaknesses in its
functions.

9.8 REFERENCES AND FURTHER READINGS

Bhaduri, Amit and Deepak Nayyar, The Intelligent Person’s Guide to

Liberalisation, Penguin Books India, New Delhi.

Bhagwati, J.N. and Desai, P., India: Planning for Industrialisation, Oxford
University Press, Oxford, 1970.

Bhagwati, J.N. and T.N. Srinivasan, Foreign Trade Regimes and Economic
Development, National Bureau of Economic Research, New York, 1975.

Chakravarty, S, Development Planning: The Indian Experience, Oxford

University Press, New Delhi, 1987.

Musgrave, R.A., and P.B. Musgrave, Public Finance in Theory and Practice,
McGraw-Hill Book Company, New York, 1989.

Srinivasan, T.N., Eight Lectures on India’s Economic Reforms, Oxford

University Press, New Delhi, 2000.

Stiglitz, J.E., Economics of the Public Sector (second edition), W.W. Norton &
Company, New York, 1998.

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