There are two models of development :

a. Socialist model: in this model of development the government is the key player in development. In this model, the goods are produced as per the need of the society. The government here itself assumes the needs of the people. the government decides how and where the goods are to be produced. In this model, there is no private property.

b. Capitalist model: in this model of development, the goods are produced not as per the need of the society but as per the purchasing capacity of the people. Here private companies are the key players.

India, then led by Pt. Nehru was appealed by neither of the models. In the capital model, the poor were being left in their condition and their status would never be improved, whereas in the socialist model the country would be busy fulfilling the needs of the society and would not be led to development.

c. India went for a mixed economy.

In this model, the market will provide whatever goods and services it can provide well and the government will produce the basic goods and services which the market will not produce.