IT exports of 3.5% of the overall surplus service account of 6% have helped tide over the trade deficit to some degree for 2011-2012. Trade deficit for the period stood at 10.2% of GDP and IT earnings export, alongwith service sector exports, helped trim the deficit to around 3.8-3.5% of the GDP, he said, while addressing the gathering at the Polestar award function of Polaris Financial Technology.
While asserting the need to retrace the high growth trajectory of 8-9% in the coming years, he called for economic thinkmanship in achieving the growth.
Growth with inclusivity and equity reaching all strata of the society is the need of hour. The concern for environment and humans should be factored in the growth process and we should not sacrifice the very idea of growth that redeems millions of people from poverty and enable mobilising of resources through taxation to roll out social welfare programmes like rural employment guarantee scheme, food security and rural health mission. With a current per capita income of $1,600, only high GDP growth could boost the income levels to $8000=10,000 in 2020, which would upgrade the country from being a low income to middle income country, he said.
Identifying agriculture and infrastructure as two major areas that are distorting the possibility of high growth, Rangarajan said the country should focus on overcoming production shortfall and rejig the basket of items in the agricultural commodities to increase production of certain items that are fuelling the food price inflation in the market.