46 SOCIAL SCIENTIST few years. Of these, specific mention must be made of two. First, the oft-repeated exhortations to raise the administered prices of a number of 'basic' goods, either for revenue raising reasons or for bringing them "in line with international prices", stem from a rather optimistic view of the relative costs of adjustment and of passing the burden to the major user of these goods, i.e., the organised sector. Secondly, the transition to a tariff-based system from a quota-based one, in order to expose the domestic economy more fully to international conditions, also opens up a similar possibility. This is because adjustment to balance of payments shocks with constant tariff rates through currency devaluation would necessarily mean a greater rise in the price of 'universal intermediates' than in the present situation where increases in quota premia of capital or specific intermediate goods do much of the adjustment. In both these cases, the equity effect would be similar to that of the oil price shock. And, it is not at all clear that there would be any real efficiency gains from either policy, especially if account is taken of two factors. First, that such policies can actually increase distortions when different degrees of indexation exist in the organised and unorganised sectors. Second, in the specific context of an agriculture constraint, the effect may be to reduce agriculture growth, and this would overshadow any marginal allocative gains. A far better alternative, if world prices are to be used at all, through either administered prices or import policy, is to move towards a system where all primary goods and 'universal' intermediates have a fixed effective exchange rate and all capital goods and specific intermediates have another and flexible effective exchange rate—with the latter bearing the burden of shocks, and also raising revenues. Although the policy regime outlined above may seem most unorthodox, it is merely a more logically consistent variant of the system that is currently in place. Its consistency lies, first in that it is likely to be more effective than present policy in increasing manufactured exports. Secondly, in that the longer run considerations of growth and equity are firmly embedded in the policy options that the government chooses to allow itself in times of internal or external shocks, in contrast to the somewhat ad-hoc 'crisis management' type of behaviour that has characterised the recent past. Moreover, it is not at all clear that this regime unambiguously reduces the flexibility of government policy interventions. If it is accepted that needlessly contractionary monetary or fiscal policies should be eschewed because of their certain negative equity effects and doubtful allocative effects, much greatw-r flexibility in and targeting of public investments becomes necessary. The proposed system facilitates such decisions, first by being more sensitive to world conditions, and second by ensuring that domestic s»hocks are borne more by the sectors which can afford to do so without jeopardising the creation of the socially necessary 'universal' intermediates, particularly infrastructure. , Unfortunately, many of the suggestions made above run contrary