STATEMENT ON THE INDIAN ECONOMY 73 increases in expenditures on defence and internal security. Defence expenditure, despite its large and growing magnitude, has for too long been kept out of the domain of public discussion. This lack of accountability has resulted in unsound decisions and also in corrupt practices. The result has been a massive increase in the debt of the Government and in the magnitude of deficit financing. This underlies the increase in the rate of growth of national income, largely on account of incomes in the services sector (including public administration and defence) and increases in the output of those sectors of industry, like consumer durables, that have benefited from the demand generated by increased incomes in the upper income groups. The leading sector in the growth process in recent years is neither agriculture nor industry, but services. Industrial growth has been concentrated in a few sectors catering to the demand for import-intensive 'luxuries' on the part of the well-to-do sections of the population. And, even the recorded growth in agriculture has been the result of high growth rates in a few pockets of the country, where a relatively small section of the agricultural population has skimmed off the profits. While foodgrains production as a whole has grown at a rate just above the rate of growth of the population, large tracts of the country have in fact registered a decline in per capita food production in recent years. Further, there are a number of crops like coarse grains and pulses that have actually recorded extremely low rates of growth in production. These distortions in the economy have been accentuated in recent years by the Government's policy of liberalization, that has sought to provide greater economic space for the private sector (including foreign firms) and to increase the degree of openness of the economy. Consequently, the role of the planning process has been sharply eroded. The market mechanism obviously signals the demands of the rich and the private sector has been provided with freer access to imports of capital, technology, equipment and intermediates to meet these demands. The growth that ensues is financed through increased indebtedness and is necessarily energy-,capital-and import-intensive. This, rather than efficient production based on a rational system of prices and economic scales of production, is the content of the modernization programme that underlies the new economic policy. The burden of debt servicing has mounted to almost 40 per cent of export earnings and more than 25 per cent of current account receipts. External debt as a proportion of national income is 30 per cent as compared with just 10 per cent 7 years ago. If the present level of the current account deficit to GDP ratio persists, then our Debt/GDP ratio would set itself on an explosive path. This growth process has very limited potential for employment generation, while its fallout in the form of a rapid, unplanned decline in traditional industries leads to a massive loss of existing employment.