RESOURCE MOBILISATION 13 I
Mixed Economy : A Variant of Capitalist ^Development
The existence or an expansion of public sector is sometimes characterised as representing 'doctrinaire approach' to socialism. Public sectors of varying dimensions have characterised capitalist development all over the world. A modest public sector embracing public utilities and a minimum of regulatory and welfare activities was envisaged by the Classical economists and, in fact, found a place under capitalist development even in its formative stages in various countries. Late-comers in industrial development used the state sector as an activator, stimulator and a pioneer. Germany, Japan and even USA are cases in point. All the capitalist countries had an expanding public sector especially since the Great Depression. In the absence of a broad-based indigenous private capitalism, State, in most of the developing economies of today, has become the pioneer, protector, activator and regulator as well as the creator and innovator of an institutional and social environment conducive to 'rapid economic development and social change5. In this context, the scope of the public sector embraces social overhead capital as well as directly productive undertakings.
In India, even the period of colonial administration was characterised by large-scale public investment in railways, irrigation and public works, though the primary motivation for such investment was the needs of the metropolitan economy and the strategic and political objectives of the colonial regime. At the same time, nearly two centuries of foreign rule has resulted in serious structural imbalances and glaring social and economic inequalities. Independence was preceded by several decades of stagnation of the Indian economy. Because of the muted opportunities, industrial development was lopsided and stunted. Consequently, the industrial base remained extremely weak and restricted. Net investment in the economy was hardly more than five per cent of the national income even at the best of the years before independence. The share of the private sector in net investment was indeed very small. The bulk of capital accumulation in the private sector was in non-industrial activities. As such, its capacity for self-generating industrial development was rather negligible. It is to cover some of these deficiencies that public investment on an unprecedented scale has been undertaken. Even before planning had actually been introduced, all the various plans including that of the Bombay Plan1 chalked out by the leading businessmen in the country placed a heavy responsibility for development on the government sector. But though the volume of public investment has increased considerably over the plan period, infrastructure investment in railways, roads, irrigation, power and so on, as well as in heavy and basic industries accounts for more than three-fourth of public investment.
It is true that the public sector has extended into the industrial sphere in a big way. However, the bulk of public investment in