Expressing concern over high current account deficit, President Pranab Mukherjee said on Thursday exports need to be increased to bring down the deficit to sustainable levels.
"A matter of concern is the current account deficit, which at 5.4 per cent of gross domestic product during the period April to December, 2012, is very high.
"Though we have managed this deficit through capital flows, we have to increase our exports to bring it to a sustainable level," Mukherjee said at a function of the Indian Institute of Foreign Trade.
The CAD occurs when a country's total imports of goods, services and transfers are more than total exports of goods, services and transfers.
"The compound average growth rate of our exports during 1991-92 to 2000-01 was 10.7 per cent.
"This has increased to 19.1 per cent during the period 2001-02 to 2012-13," the President said.
India's exports have increased from $17.9 billion in 1991-92 to $300.6 billion in 2012-13.
He said that a strong revival of the global economy is expected in 2014.
"At a time when global demand is yet to firm up, there is a need to strengthen our export industry," he added.
However, Mukherjee said that there is a need to ensure the availability of enough food in the country.
"While we must be proud of our performance in commodity exports, there is a need to monitor and exercise caution.
"We must ensure the availability of enough food in the country at all times.
Every citizen should have access to affordable food," he said.
The country is the world’s largest rice exporter and second largest wheat exporter.
On India's economic growth, he expressed confidence that India will bounce back to the high growth trajectory.
"The GDP growth in 2012-13 has been estimated at a muted 5.0 per cent but I am confident that we will bounce back," he said.
The President said recovery of the economy from the impact of global financial crisis of 2008 was stronger than initially seen.
"During 2009-10 and 2010-11, India’s economy grew by 8.6 per cent and 9.3 per cent respectively though the growth rates earlier estimated for these years were much lower," he said.
"The ongoing global financial crisis has decelerated our economic growth in the last two years," he added.
He also said that increased trade liberalisation and economic cooperation will not count much unless they result in tangible benefits for people.
"Hence, thrust should also be placed on meeting other objectives like employment generation and regional development. Our export sector should be able to drive the socio-economic development of our country," he said.
Mukherjee said that to reduce dependence on imports, India has encouraged domestic manufacturing for inputs to export industry.
Mukherjee said although the global financial crisis has impacted the country's exports, the government's initiative of diversification of export market has helped shipments grow.
"To build export competitiveness, we have promoted technology upgradation.
“We have pursued market diversification to evade the risk of global downturn.
“We have also encouraged exports from the North Eastern Region, which has a special place in our economy," he added.
Indian exporters are now focusing on new markets such as in Asia, Africa and Latin America.
These geographies accounted for two-third of our exports in 2012-13.
"The slowdown of the global economy has impacted our external sector. But due to the market diversification strategy, we have been able to mitigate the impact considerably," he said.
He also said that India has taken a proactive stance at forging trade and economic partnerships with several economies and trading blocs.
"Comprehensive Economic Partnership Agreements have been entered into with Singapore, South Korea, Japan and Malaysia. Similar agreements are being negotiated with India’s prominent trading partners like the European Union," he added.
Mukherjee said that India viewed exports as a means of employment generation and have given a thrust on employment intensive industry.
On IIFT, he said that the institute's endeavour should not only be to produce successful managers, business leaders and academic thinkers but also to prepare them as socially conscious citizens who have the capacity and willingness to respond and contribute to our society’s needs.
Image: President Pranab Mukherjee | Photograph: Adnan Abidi/Reuters