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Economic System of India

India’s Economic System

The type of Economic System of India is a Mixed Economic System.

The Impact

About half of the people who work in India rely basically on agriculture, which can be attributed to a traditional economy, and about one third of the workers in India are employees in the services industry, which amounts to two-thirds of India’s output. In addition to this, India has privatized many enterprises fully state-owned, gives opportunity to foreign direct investment, and also deregulated various industries. (Amadeo, 2015) in “about news”

Furthermore, there had been more primacy of the public sector. According to “hubpages.com,” this act had been adopted after the independence and since 1956; diverse industries in the public sector were classified into three categories, which they inferred as schedule A, schedule B, and schedule C. Where, schedule A and B incorporated all the major and basic industries, and schedule C included the other industries and the private sectors were allowed to function in this category.

However, there had been global changes that took place relative to this economic system. There were reduction in trade barriers, a better atmosphere for the flow of capital between other countries, and a reduced obstruction to flow of labor, as well as technology. Therefore, the Indian government moved with this trend and there were several reforms in the different industrial sectors in the country.

Fiscal and Monetary Policy

It is well known that the major reason for fiscal policy is to specifically deal more with the expenditure and taxation decisions of the Indian government. Some of which include expenditure policy, tax policy, investment or even disinvestment techniques, and also surplus or debt management. (De, 2012) While the reason for monetary policy specifies how the Indian central bank controls the use of instruments to regulate the cost, availability, and use of credit and money. (“Reserve Bank of India”)

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