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The concept of mixed economy provided the framework under which the task of economic and social development was to be achieved. Mixed economy means coexistence of both the public sector and private sector in the national economy. Accordingly, the government classified industries into three categories.

The state assumed the exclusive responsibility of the industries included in the first category, these are arms and ammunition, railway, atomic energy, etc. The second category comprises industries which had to be progressively state owned, but in which private enterprise also is expected to supplement the efforts of the state.

These are fertilizers, road transport, machine tools, essential drugs. In the third category lies the rest of the industries, including consumer goods industries and their development has been lift to the private sector.

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Thus the industries which are of basic and strategic importance or in the nature of public utility services are placed in the public sector. They required large investment, involved long gestation period and could yield delayed return. This could be afforded only by the state. The private sector grabbed the consumer goods industries by giving quick profits on investment and involving negligible risks, if any.

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