Ques. “Services constitute a major portion of India’s GDP with a 57 per cent share at factor cost however the immediate challenge in the services sector is revival of growth”, while analysing the given statement describe the suggested measures to overcome the challenge of revival of growth in the services sector of India.
India has the second fastest growing services sector in the world. In 2013-14 the growth rate of the services sector at 6.8 per cent is marginally lower than in 2012-13. This is due to deceleration in the growth rate of the combined category of trade, HOTELS, restaurants, transport, storage and communications.
Some suggested measures are:
- Reforms and speeding up of the policy decision-making.
- The survey pointed out that a targeted approach with FOCUS on big-ticket services could lead to a rebounding of services sector growth for India.
- According to the economic survey many issues, including domestic regulations hinder growth prospects of the services sector, which, if addressed deftly, could help the sector and lead to exponential gains for the economy.
- There is an urgent need for a nodal agency for the sector. Acc. to survey, there is no single nodal department or agency for services. Therefore, a more PROACTIVE approach and proper institutional mechanism is needed to weed out unwanted regulations and tap the opportunities in the services sector in a coordinated way.
- Speeding up disinvestment in some services sector PSUs could not only provide revenue for the government but also speed up the growth of these services.
- For the tourism and hospitality sector, the survey suggested measures such as creating world-class tourism infrastructure even by PPP; addressing multiple taxation issues; skill and etiquettes training to cater to the needs of tourists; special focus on cleanliness at tourist sites and SAFETY of tourists and implementing urgently visa on arrival and E-visa facilities.
Services in India are emerging as a prominent sector in terms of contribution to national and states’ incomes, trade flows, FDI inflows and employment. With a stable government in place and growing optimism which could translate into investment and growth, some quick reforms and removal of some barriers and obsolete regulations in the services sector could help.
The contribution of the Services Sector has increased very rapidly in the India GDP for many foreign consumers have shown interest in the country’s service exports. This is due to the fact that India has a large pool of highly skilled, low cost, and educated workers in the country. This has made sure that the services that are available in the country are of the best quality. The foreign companies seeing this have started outsourcing their work to India specially in the area of business services which includes business process outsourcing and information technology services. This has given a major boost to the Services Sector in India, which in its turn has made the sector contribute more to the India GDP.