THE NEW TEXTILE POLICY 77 encourage exports, exporting mills were allowed to set off a certain proportion of their controlled cloth obligation against exports. Hence although there was no scaling down of the obligation, these two exemptions in effect reduced the obligation from 800 million square metres to about 550 million square metres for that period. Then in March 1976 production of dhotis and saris was transferred to the handloom sector, which came to about 200 million square metres in a year, and since then there has been constant pressure from the industry to transfer the total obligation to the decentralised sector. Now under the new scheme the quantum of mill-made controlled cloth has again been reduced to the earlier 400 million square metres which would be produced by the NTC mills, and ultimately would be taken over by the decentralised sector especially the handlooms. After earmarking the NTG share, contracts for the production of the remaining quantity would be given to the privately owned mills on the b?sis of competitive bids subject to the price not exceeding the cost at which similar cloth would be manufactured by the NTC mills. If we examine the government's own understanding of the failure of the controlled cloth scheme the new policy does not appear to be a very serious attempt on its part to ensure the clothing requirements of the poor consumers. According to the government although the production of controlled cloth was heavily subsidized it failed to provide cheap cloth to the consumer since the distribution system was unable to reach large sections of the population. Moreover in its view ^the system of determining quotas for the production of controlled cloth on the basis of loom shifts has thrown a heavier burden on the weaker mills". The losses suffered by these mills in the production of such cloth has been the major cause of their sickness. Hence a number of mills it is argued, were exempted from the production of controlled cloth, resulting in a decline in its production. However, there can be many objections to the above argument: Firstly the fact that controlled cloth obligation has been drastically reduced makes one suspect that the government implicitly lays greater stress on the absence of an effective distributive mechanism as being the major cause of the failure of the scheme rather than the insufficiency of production. This needs closer examination for it is not very easy to believe that 400 million square metres which is just about 10 percent of total cloth production of the mill sector, would suffice, to meet (even after taking into consideration the cheap cloth output of the decentralised sector) the clothing requirements of the poorer consumers, if properly distributed Secondly, the decline in the controlled cloth production connot be explained purely in terms of the exemptron granted to the weaker mills, for, according to the Textile Commissioner himself a number of well-to-do textile firms have defaulted in the production of such cloth.