What is meant by 'mixed economy'?

Correct — C. In a mixed economy the government and the market work together, so the public and private sectors operate side by side.

NCERT puts it this way: the market provides whatever goods and services it can produce well, and the government provides the essential goods and services the market fails to deliver.

India's planners chose this path: a strong public sector alongside private property.

Both private and public sectors → option (c).

Why the others are wrong

• (a)
  Only private sector — Only private sector describes a market economy, or capitalism, where market forces decide what is produced. A mixed economy keeps a public sector alongside private firms.
• (b)
  Only public sector — Only public sector describes a strict socialist economy, which NCERT says has no private property because the state owns everything. A mixed economy leaves room for private enterprise.
• (d)
  Only foreign companies — Foreign companies are not a separate sector. Where they are allowed, they operate as private firms, and a mixed economy is defined by public and private ownership, not by nationality.

Every economy must decide what to produce, how to produce it, and how to distribute it. NCERT sorts economies by who answers.

In a capitalist (market) economy, supply and demand decide. In a socialist economy, the government decides. In a mixed economy, the government and the market answer together.

In industry, the Industrial Policy Resolution of 1956 drew the lines. It split industries into three groups: owned exclusively by the government, open to private firms supplementing the public sector, and the rest left to the private sector.

Key facts

• A mixed economy has public and private sectors operating together.
• NCERT: in a mixed economy the government and the market together decide what to produce, how to produce and how to distribute.
• The Industrial Policy Resolution of 1956 classified industries into three categories and formed the basis of the Second Five Year Plan.
• After the 1991 reforms, only part of atomic energy generation and some core railway activities remain reserved for the public sector.

Common traps

• Reading 'mixed' as a mix of Indian and foreign firms: the mix is of public and private ownership.

No directly related past PYQ was found.