OUTLINING FUTURE

With plenty of opportunities, the services sector is like an uncharted sea. As yet, its potential has not been tapped fully by India. A targeted policy of removing bottlenecks in major and potential services can result in large dividends in the form of higher services growth and services exports, which in turn can help in pulling up the economy to higher growth levels. The future actions in the sector can be outlined as given below11:

(i) India’s services sector, which showed resilient growth after the recovery of the global economy following the global financial crisis, has been showing subdued performance in recent times. Despite the slowdown, the prospects continue to be bright for many segments of the sector.

(ii) In future, government’s focus on the following are expected to provide impetus to logistics services—

(a) infrastructure development,

(b) favourable regulatory policies like liberalisation of FDI norms,

(c) increasing number of multimodal logistics service providers,

(d) growing trend of outsourcing logistics to third party service providers, and

(e) entry of global players.

(iii) Though shipping services are at a low key at present, with increased imports of POL (petroleum, oil and lubricants) for stocks build up to take advantage of low crude oil prices, containerisation of export and import cargo and modernisation of ports with private sector participation, recovery of the shipping and port services sector can be expected.

(iv) The prospects for Indian aviation services have improved following—

(a) the fall in prices of aviation fuel, which accounts for nearly 40 per cent of the operating expenses of airlines in India;

(b) liberalisation of FDI policies in civil aviation; and

(c) strong growth in passenger traffic – expected to continue in the near future.

(v) The outlook for the retail industry remains positive as India continues to remain an attractive long-term retail destination despite the various challenges faced by the sector. Following initiatives are expected to give a fillip to the sector—

(a) allocation of Rs. 1000 crore to technology and start-up sectors,

(b) promotion of cashless transactions via RUPay debit cards, and

(c) growth of e-commerce.

(vi) Government’s focus on the tourism sector including easing visas by

eTV and building tourism infrastructure could help in the recovery of the tourism sector.

(vii) Despite challenges in the global market, the Indian IT industry is expected to maintain double or near-double- digit growth as India offers depth and breadth across different segments of this industry, such as, IT services, BPM, ER&D, internet & mobility and software products.

(viii) In the telecom sector, the introduction of 4G which could be a game changer and inclusion of fibre optic connectivity which will tremendously increase the reach and bandwidth along with greater use of mobiles in government’s social sector programmes could give a further boost to this fast growing sector.

Several relevant and contemporary suggestions have been articulated by a Working Paper of the Ministry of Finance by late February 2016. Dealing with the sectors like tourism, shipping and port, IT and software the advices are deeper and effective12.

As per the Economic Survey 2016-17, the growth prospects of the services sector has slowed in recent times caused by several external and domestic reasons. The Nikkei/Markit Services PMI (Purchase Manager’s Index) for India was at a high of 57.5 in January of 2013 which fell down to 46.7 in November 2016 from 54.5 in October 2016. However, it increased marginally to 46.8 in December 2016. The Baltic Dry Index (BDI) an indicator of both merchandise trade and shipping services, which showed some improvement up to 18 November 2016 (at 1030) declined to 910 on 13