Explain The Planning Under Mixed Economy?

Theoretically the world is divided into two extreme economic system, capitalism and socialism. The capitalism or free enterprise economies are characterized by a lot of problems like misallocation of resources, market imprecation, monopolies, exploitation of the consumers and widening gap between have and have nots.

Moreover, the capitalistic model of life  was not capable enough to provide the economic development to the developing countries in a shortest period; it fails to remove unemployment and inflation; the deficit in the BOP and in the budget went on mounting; the population went on growing; the structural changes like capital formation remained very low; the financial order could not be maintained; and above all the social life, the behavior and the outlook of the people remained at very low level. Because of these problems, the capitalism could not be maintained in its crude form.

On the other hand, the socialism was attached with the complete over social, political, religious and economic life. The state was authorized to control and regulate the economic activities. It means that all the economic decisions, what to produced, how to produce and how it is to be distributed will be performed by the state. But this system also could not be retained in the form as presented by its pioneers.

Planning under the mixed economy is indicative instead of imperative. It overcomes the shortcomings of the market economy without injecting the demerits of the command economy.

Need for planning in mixed economy like india