Hello, everyone i am joining as a new article writer, wish you all a very very HAPPY NEW YEAR and I’d like to thank co-writer and the owner of the blog Mr. K Prafull for letting me contribute. Let us check out the service sector at the very first day.
- Advertisement -
The service sector is the backbone of the socio-economic growth of the country. It is the largest and fastest growing sector around the globe and the biggest employer too. The real reason behind this robust growth is the increase in urbanization, privatization and increased demand for the consumer services – be it intermediate or final consumer services. Indian services sector witnessed a boom and it is one of the major contributor to GDP and employment within in recent times. The trends are changing here in our land, the service sector not only account for more than half of India’s GDP and a contributor of the quarter of employment in the country. There is a wide range of the activities in the services sector but one of the key service industry is to be looked upon would be HEALTH AND EDUCATION. Having a wide range of activities and looking at the robust growth and LIONS SHARE in India’s GDP the Finance Ministry for the first time put a separate chapter in Pre-Budget Economic Survey for a better and more regular data on the sector.
Read Also: Transportation in India: India transport sector
The share of services in India’s GDP at factor cost rose rapidly from 30.5% in 1950-51 to 55.2% in 2009-10. if construction segment is also included in it will add up to tall 63.4% but as p[er national accounts classification in its secondary sector though RBI and international institutions like WTO included it under service sector. Central Statistical Organisation (CSO) classified this sector into four main categories:
1. trade, hotels, and restaurants;
2. financing, insurance, real estate and business services;
3. transport, storage and communication; and
4. community social and personal services.
According to WTO, India is the net exporter of services. We need to work on our service sector to maintain the growth or robust growth in other words for upcoming years. It has been seen that the top 12 countries logged a negative growth due to getting struck in the swirls of financial crises but India (2.6%) and China(9.4%) has recorded positive growth.
Need of the Hour
1. The need is for retaining the country’s competitiveness in those services sector where it has already distinguished such as IT and ITeS and telecommunication.
2. Tourism and Shipping industry where other nations have already established, we need to do more homework there in respect of tourists friendly milieu and to match the standards of facilities provided there of international level.
3. Niche areas such as financial services, healthcare, education, accountancy, legal and other services where country have a huge domestic market has shown some dents in global markets. This requires reciprocal movements on the part of India in opening up its own markets, liberalizing FDI not only to improve infrastructure but also to absorb best practices universes that are so universally acclaimed.
Also Read: Kyoto Protocol Detailed Analysis
FOREIGN DIRECT INVESTMENT
Another important factor playing the important role in the service sector. The continued growth of the services sector is predicted on certain reforms and these, unfortunately, have all run into controversies, political differences and look increasingly uncertain . The single one factor that can add up to the expectations of service sector or that can contribute most to the further growth is the flow of FDI. Despite severe restrictions, the services sector has attracted no less than 44% of the total equity flows between April 2000 and December 2010, in only four sectors namely, financial and non-financial services, computer hardware and software, telecommunication and housing and real estate.
including construction flows will jump to 51%
It should be noticed that greater integration with large global players through investment and international relationship building could help in overcoming these challenges and making India a services superpower.
According to paper published by Union Finance Ministry, top priority area relating to FDI are:
1. retail trade FDI;
2. raising FDI cap in insurance and banking sector ; and
3. FDI in railways.
let us now have a look at the issue which made a huge hubbub few months back, yeah you got it right FDI in retail.
The opposition to FDI in retails by political parties and others is somewhat misplaced. Indeed, the entry of large organised retail chains could benefit the small time farmers to the unemployed youth in the cities and towns. The govt. is reportedly working out a set of rules for the operation of foreign retail chains. These will understandably include the requirement of local procurement. According to the reports, the foreign retailers will be obliged to procure at least 30% of their own wares locally. the large retailers could as well help in stabilizing prices by going directly to the farmers for the purchase of food, vegetables, and other eatables, thereby cutting out the tiers of middlemen. It is well known how the traders had jacked up the prices of onion during a temporary shortage of the onions in the North Indian markets.
Unless the service sector growth quickens, India cannot attain the professed double-digit growth. Attracting FDI and forging more effective international linkages are the key to this objective. At last not going in very much detail of this large sector we should halt our activities here and will come up with the analysis of sub-sectors of this LIONS SECTOR discussing various pros and cons. once again wish you all a very very HAPPY and PROSPEROUS NEW YEAR. ENJOY THIS NEW YEAR WITH YOUR LOVED ONES.