C P Chandrasekhar A close scrutiny of the estimates of capital formation in the post-reform period shows that no linkage can be established between liberalisation, private investment and industrial growth. What liberalisation has done is to unleash a consumption boom, fuelled by a surge in consumer credit that has accompanied financial sector reform. Such a boom not only increases balance of payments vulnerability, but also offers, in terms of markets, only a once-for all boost that would exhaust itself unless some other stimuli ensure expansion of the home market for manufacturers.