No, I do not think it is the right policy to promote exports at the cost of unfulfilled domestic demand. But a country has no choice when its imports bills are too heavy and the goods which are being imported have no domestic substitute like petroleum products in case of India.
Government can take following steps in this regard:
1. We need to concentrate on making Indian industries more competitive in international market so that export demand for Indian goods increases especially for those which are in surplus in India.
2. We need to provide Indian goods in domestic market at such competitive prices so that people are naturally not attracted towards foreign goods because gone are the days when we could stop foreign countries from entering the market through taxes and quota.Now we can stop them only through tough competition.