I do recognise that there are areas where we need to do more in the immediate future if we are to sustain our growth momentum. We need a further deepening and widening through a reform of our banking and financial system so that the underlying potential of savings and resources can be mobilised and deployed efficiently.
We need to develop a long-term debt market which will fulfil both the needs of long-term savers and the massive investment in infrastructure. The labour markets too need to be made more efficient, although I often feel that this problem is overemphasised, since 90 per cent of India's labour force is in the so-called unorganised sector and this sector is not constrained by any unwieldy laws.
We also need to improve both the quality of governance at all levels and public service delivery mechanisms, particularly in the social sectors. We have generated adequate resources in the last three years for use in social sector without sacrificing fiscal prudence. However, we cannot spend our way to prosperity. Having tangible outcomes is, therefore, as important as increasing outlays. This is the single biggest concern of our government today and we have to address this issue if we need greater returns on our social investments.
I am happy to report that the Indian economy has become much more open and is increasingly integrated with the global economy. This has its rewards and risks. As the world's largest democracy and an open society and polity, we believe we must also be an open economy. However, this process has had to be calibrated and measured so that domestic enterprise and our working people are able to adjust to emerging realities. I find it surprising when I continue to hear complaints about our economy still being a relatively inward-looking economy.
Consider just one measure of openness -- the share of external trade in national income. According to the published official data, the share of trade in India's GDP compares favourably with a number of industrial and industrialising economies, including the US and Japan. Moreover, India's approach to foreign trade has never been that of mercantilist. We have never been keen on accumulating a large trade surplus. Our exports have risen to finance higher imports and we continue to have a trade deficit with the rest of the world.
In the last three years, we have taken more unilateral steps to integrate our economy with the evolving world economy. The peak rate of import duty, which was very high till only recently, has now been reduced to 10 per cent, bringing it very close to Asean levels.
Further, we are keen that multilateral trade talks succeed. We are firm believers in a rule based global trading system and hence, we welcome resumption of negotiations in the Doha Round at the WTO. A multilateral trade regime is in our strategic interests. As a relatively small trading nation, we benefit from global rules of the game. We are, therefore, committed to an early positive conclusion to the Doha Round. In order to break the impasse, developed countries must make meaningful offers to reduce the huge trade-distorting subsidies provided to their agricultural sector.
Equally, it must be recognised that for us agriculture is not just a business but a way of life and a major source of livelihood. Markets are good for those and they serve those who are part of market systems, but have no meaning for those who do not have the skills or resources to participate in market processes. We should therefore work towards an outcome which does not destabilise and cause distress to this large sections of our people.
(Excerpts from an address by Prime Minister Manmohan Singh at the roundtable sponsored by The Economist on March 13.)