openness, both in terms of trade flows and capital flows which increased in the 1990s accelerated in the 2000s ( chart 5 ). this was made possible due to substantial liberalisation of the capital account and greater openness to private capital. in the first three decades after the independence, cad was mainly financed by external assistance and drawdown of forex reserves. since much of india ’ s planning strategy was conceived in terms of a closed economy theoretical framework, private investment inflows into the economy were not encouraged much. therefore, foreign resources came primarily in the form of official transfers. the private investment came mainly through technology transfer, but played a minuscule role. during this period, the development efforts and stress on bop from time to time led india to tap diverse aid sources for specific projects. in the 1980s, as the traditional source of official concessional flows dried up there was a need to access private capital. but, this came in the form of debt creating flows though costly external commercial borrowings ( ecbs ) and nri deposits. the limitations of financing cad through debt creating flows were exposed in the 1991 crisis. subsequent reforms and opening up the capital account to non - debt creating flows of foreign direct investment ( fdi ) and portfolio equity flows not only completely transformed the sources of financing of the bop but it also resulted in substantial addition to reserves in the 2000s ( table 4 & chart 6 ). bis central bankers ’ speeches concluding remarks with the gradual external liberalisation of indian economy, not only the size of bop has increased manifold, but the pattern of current and capital account has changed. even though the reform process has strengthened resilience of india ’ s external sector, at the same time vulnerabilities arise with greater exposure of the economy to the rest of world through liberalised trade and investment environment. india ’ s current account particularly remains vulnerable to developments in the trade account. it is evident from the size of trade deficit growing from 0. 5 per cent of gdp during 1951 – 55 to 8. 7 per cent during 2007 – 12. in 2011 – 12, the current account deficit has widened to a record 4. 2 per cent of gdp ( chart 7 ). over the years, current account derived some resilience from surplus generated by invisibles, particularly software exports and private transfers, but trade deficit continues to dictate the overall trend in the current account. whenever trade account worsens reflecting downswings in the global business cycle or rise in international oil prices,

is the “ range of one ’ s perception and experience ”. putting these two meanings together suggests to me that when you chose this topic for this year ’ s convention, you were actually asking your members to find ways of enlarging “ what the industry knows about what it can experience and what it is able to do ”. you were, in a sense, asking your members to find ways to enlarge these things to the point where the sky and earth seem to meet. i wish to tell you even now, that in this journey you have chosen, the industry can expect the bsp to provide an operating environment that would allow you to traverse this path, but in a way that makes you also mindful of the impact of your actions – not only on yourselves but also on the rest of the members of the financial eco - system you are in. how shall we broaden the horizon? your goal for 2013 is clear – to broaden the industry ’ s horizon. but how would you achieve this? in geometry and in nautical science, i am told practitioners have derived a mathematical formula for calculating the distance to the visible horizon. the exact equation bis central bankers ’ speeches will depend on whether adjustments for refraction, i. e., the distortions due to light, are done or not. but the common element in any of the equations is this – that the distance to the horizon is a function of the height from which you are taking your view. more specifically, the visible horizon will be further from you, the higher you are above the ground. this natural law is quite interesting in that it also applies to the laws of economics. if i were to apply this law to your chosen goal, i would paraphrase as follows. if the ctb wishes to broaden its horizon, the chamber needs to raise its vantage point. the stage is set using 2012 as our gauge, i believe you will agree with me that the country has certainly raised its vantage point. when we consider our markets, the environment is indeed more favourable now than it has been in the recent past. the economy expanded by 6. 6 percent in 2012 and this growth was matched by generally stable prices as inflation averaged 3. 2 percent last year. the high growth - low inflation scenario was further supported by our robust external position. the country ’ s balance of payments remains in surplus due to investment growth, business process outsourcing receipts and the steady rise in remittances. this led to