54 SOCIAL SCIENTIST financing symbolizes political irresponsibility and economic bankruptcy. Developing countries engaged in raising the rate of investment far above the voluntary rate of saving would generally be confronted with an inflationary gap unless they adopt a comprehensive system of planned allocation of resources and controlled distribution. The mixed economy evolved in India has assigned to the public sector riskier jobs of building up the industrial base of the economy involving huge investments leaving the centres of quick profit in private hands. The system operates mainly through the market mechanism subjected to partial regulation and control. There are enormous wastages inherent in the system. Quite a bit of scarce resources—both internal and external—are frittered away to ensure the supply of "incentive goods" to propitiate the gods of private investment. A substantial part of household savings seek unproductive channels of investment. The surplus labour which abounds in the economy could not be utilized for want of a suitable organization. Manipulative tendencies on the part of monopolists and oligopolists result in non-utilization of created or intended capacities. One wonders how far high pressure advertisement and sales promotion characteristic of mature economies faced with a deficiency of demand are consistent with a sellers' market having acute shortages. Even the government is unable to keep unproductive investments under check. Problems of Mixed Economy Under this system, the excess demand implied in any major investment effort manifests itself through inflationary pressures which defy the system of partial regulation and control. There are several factors which aggravate inflation. First of all, the inability of the system to convert surplus labour into productive capital constricts the overall investment effort and thereby the growth of output.7 Secondly, dissipation of scarce resources in wasteful consumption and unproductive investment widens the inflationary gap. Thirdly, there is a secular tendency to elongate the average gestation period of public investments on account of the deepening of the industrial base dictated by the lon^-term needs of balanced economic development. Fourthly, growth of unproductive consumption and investment in the public sector has kept public savings far below what was envisaged under the plans. Paucity of investible resources have led to their thin spread over committed programmes and projects resulting in a further elongation of the average gestation period of public investment. The irrationalities and expediencies in political behaviour have also adversely affected the gestation period. Investment decisions in India are not based on appropriate cost-benefit analysis. Locational disadvantages are often disregarded. More serious is the inclination of the politician to mortgage the long-term objective of development to immediate political gain and popularity with the electorate. Consequently, he is always prone to undertake more projects than would be warranted by resource