This section discusses the place of the individual being (jiva) in the scheme of creation. Vasishta points out that the individual is none other than the ego sense or I known as ahamkara. This ego sense is the chief impediment to living with the knowledge of ones true self (atman sthiti). It is because of the ego sense that human beings fail to recognize themselves as they really are and suffer misery. It is only when the identification with the ego sense is extinguished that a seeker attains realization of the atman, the Supreme Soul.
The body and the senses are inert. It is the chidabhasa, the reflected light of the atman, that gives life to the body and makes the senses perform their functions. The objects perceived by the senses are not different from the atman. The perceiver and the objects perceived both originate from the atman and therefore are identical. When a person gains firm comprehension of this truth, he or she realizes that nothing exists apart from ones own atman or Self.
This atman is then realized as both the origin of this universe and its enjoyer as well. When this knowledge becomes firm a person is freed from the duality of happiness and sorrow. Chastity (bramacharya), constant practice (abhyas), and detachment (vairagya) are the means for attaining this knowledge, which in turn leads to a firm abidance in the Self (atman stithi).