70 SOCIAL SCIENTIST / simply add to their profit margins.17 Since the domestic market for manufactured consumer goods is still heavily protected, liberalised imports of capital and intermediate goods actually increases the "effective rate ofprotecrion"— to use an impeccably neo-classical term—and hence the profitability of domestic producers of these goods. And with controls on the pattern of production and consumer demand being rolled back through liberalised investment licensing and reduction of direct taxes, it is the pr9fitability of producing for the top end of the domestic market, rather than export, which has received a boost. Such an orientation of production is highly import-intensive. In the limiting case, it is confined to reassembly of goods imported in knocked-down condition. This requires little or no fresh capacity creation, while investment and employment in firms which are unable to secure the requisite foreign collaboration, will fall off, in the face of foreign competition. With imports no longer strictly tied to exports, and prospects for the latter uncertain, the balance of payments will be under growing strain. Two other aspects of the liberalistion package reinforce this. Firsdy, repatriation of dividend and royalty to foreign collaborators. Secondly, repayment of borrowings from the IMF and commercial sources. Repayment is to be made with interest payable at relatively stiff rates, and in dollars or SDRs, both of which have appreciated against the rupee since the loans were contracted, thanks pardy to the exchange rate policy which is also a component of the strategy. In sum, our analysis points to a deepening payments crisis and industrial recession, marked by a superficial boom in certain manufactured con-summer goods industries. This is an outcome which is diametrically opposed to what the New Economic Policy claims will happen. As pointed out earlier, our analysis in the last section has been conducted at a lower level of abstraction. However, the arguments are in principle generalisable to the extent that liberalisation entails a fairly well-defined package of policies. Finally, it should be noted that we have outlined the consequences of liberalisation by-deliberately skirting any discussion of the political economy of liberalisation or of world trade prospects. 1. M. Dobb, "A Review of Discussion concerning Economic Calculation in a Socialist Economy" in On Economic Theory and Socialism, Routledge and Kegan Paul, 1972, pp 81, 82 2. F. H Hahn, On the Notion of Equilibrium in Economics, Inaugural Lecture, University of Cambridge 1973 3. Siilchomoy Chakraborty, Alternative At^roaches to A Theory of Economic Growth; Marx, Marshall and Schumpeter, centre tor Studies in Social Sciences, Calcutta, 19 p.36 4. R.L. Meek, "The Place of Keynes in the History ot economic thought" in Economics and Ideology and other Essays Chapman and Hall Ltd., 1967, pp.184, 1985. 5. Prabhat Patnalk, "Market Question and Capitalist Developmemt in India"' Economic and Political Weekly Annual Number, August, 1984. 6. G. Haberler, International Trade and Economic Development Cairo, 1959, p. 10. 7. Hia Mvint, "Exports and Economic Development of Less Developed Countries" in I.