Economic System & its types
In day-to-day life, we see different people performing the same work differently. In the same way, we can observe that India adopted a different economic system at different periods to run the Indian economy.
The economic system is the one which helps the economy in solving its central economic problems about ‘what to produce’, ‘how to produce’, and ‘for whom to produce’. The following are the different types of the economic system:
- Capitalist Society: In this type of system the goods produced are distributed among people not based on what people need but based on their purchasing power i.e., the ability to buy goods and services.
- Socialist Society: In this type of system the Government decides what goods are to be produced following the needs of society. It is assumed that the government knows what is good for the people of the country and the desires of any individual consumer are not given much importance. For instance, under a socialist type of system, the nation provides free healthcare to all its citizens.
- Mixed Economic System: In this type of system, the market will provide those goods and services in which the market has efficiency and the government will provide those essential goods and services which market failed to do so.
Read more about the state of the Indian Economy on the eve of independence.