Nehruvian Mixed Economy Model

The Indian competition law regime has grown considerably in the last six years ever since the Act became operational in 2009. Prior to the operationalization of the Competition Act in May 2009, MRTP Act was the operational law that regulated certain aspects of competition.

(India has some unique features including a mixed economy, where private sector participation has been allowed in some public sector undertakings. In addition, some of its markets have recently opened up resulting in foreign direct investment in various permitted sectors. Eventually, it is envisaged that the old practise of state-protection to companies will vanish, giving way to a more open, independent way of working for each enterprise.

On the other hand, the US had a

The Nehruvian Model was a mixed economy model – a model that was neither a market economy like the United States of America nor a socialist economy one like the USSR. Under the mixed model, both the private and public sector co-existed. The approach behind the mixed economy model was to ensure that the Government played a significant role in capital formation in the country in order to promote an inclusive economic growth and social justice. To promote economic objective, the Government reserved for itself strategic industries such as mining, electricity and heavy industries, serving public interest. The functions of the private sectors were made subject to Industrial (Department and Regulation) Act of 1951(IDRA). The IDRA empowered the Government to regulate almost every aspect of the functioning of private sector viz. size of plant and production size, price of goods produced and its distribution, foreign trade and exchange control, labor issues etc. Despite the laudable goals of the Nehruvian model, the result was unsatisfactory. While the objective of the industrial licensing system was to direct resources in socially desired directions, it however resulted in giving discretionary power to government authorities to control investment decisions of private industries, resulting in trade barriers on competition and reduction in efficiency and consequently, the growth of the economy. This compelled the Government to initiate reformation of Indian economy, the reform wave began in mid-1980s, co-incidentally during the regime of Mr. Nehru’s grandson Rajiv Gandhi. The limited reforms of 1980s were followed by wholesale reforms in the year 1991. In the wake of 1991 balance of payment crisis another round of wide ranging economic reforms were initiated under the guidance of the then finance minister and present Prime Minister of India Mr.