BOOK ttEVtBWS 6^ whereas they were left out in chapter 3 to 5. Thus putting together the two sets of results, it is evident that import substitution in the new or non-traditional consumer goods industries was dramatic whereas the ^overall consumer goods import substitution was outweighed by investment goods import substitution" (p 105). The author's findings are significant in that they lay bare certain basic characteristics of the Indian economy. While the author makes no attempt to pronounce any policy judgement, she does make quite a few significant observations which have a direct bearing on the efficiency of the import substitution policy. For finding the success of any policy measures, it is necessary to examine it in the perspective of the total policy framework in terms ot* the role it played in the attainment of the planned objectives. Even though the policy of import substitution became a practical imperative after the foreign exchange crisis of 1956-'57 its role was inherent in the Second Plan policy enunciation based on the Mahalonobis model. The essential policy question at that time was to divert enough of the economy's scarce resources towards the production of investment goods to provide for a higher rate of growth in the future. How far could the import substitution programme contribute towards this policy goal ? There is sufficient indication in the present work that the answer to this question is far from encouraging. Import substitution did, in a way, lead to a fast growth of certain industries, including the capital goods industries, but however, that does not tell the whole story. The most glaring contradiction observable is in the consumer goods sector. Following the foreign exchange crises, imports of consumer goods were drastically cut on the ground that these were inessential items, whereas no domestic control was exercised over the growth of these industries. With growing inequalities in income and wealth and preponderance of black money in the economy, there has been a steep rise in consumption standards of the chosen few. Growth of domestic demand coupled with a market protected from foreign competition gave the Indian capitalists an excellent chance to reap high profits by producing luxury consumer goods without ever caring to increase productivity. More significantly, raw materials and other intermediate goods which were imported rather liberally with a view to help the growth of the priority sectors were very often competed away into the consumption sector which offered quick profits with much less risks. In fact, the author suspects that (e the net effect of such import substitution may be the allocation of greater foreign exchange towards supporting consumer (goods) than if the finished items were imported directly." Thus the present policy not only resulted in misallocation of domestic resources but proved expensive even from the point of conserving foreign exchange. One suspects that this kind of policy by sheltering a high profit low productivity economy can only reduce its export potential thereby making