India remains second fastest growing economy in services growth

February 25th, 2011 - 2:41 pm ICT by ANI  

Pranab Mukherjee New Delhi, Feb 25 (ANI): The economic survey presented by Union Finance Minister Pranab Mukherjee in the Parliament today stated that the Indian economy remains the second fastest in the area of services with 8.9 per cent growth rate, behind China (10.5 per cent).

An international comparison of the services sector shows that India compares well even with the developed countries in the top 12 countries with highest overall GDP.

The advance estimates (AE) of the economic survey 2010-11 put the growth rate of the services sector at 9.6 per cent. This is despite global deceleration in the sector. The sector had registered 10.1 per cent growth in 2009-10.

The survey said that in terms of exports, India is also moving towards a services led export growth. In the first half of 2010-1, services exports growth was 27.4 per cent despite a dip due to the global crisis which was more due to fall in the share of merchandise trade to GDP.

The growth rate in 2010-11 is expected to be 19.5 per cent for IT - BPO services, 18.5 per cent for exports and 22.8 per cent for domestic IT related services.

The contribution of the services sector to the Indian economy has been 55.2 per cent in GDP and has been growing by 10 per cent annually. In terms of employment, although the primary sector is the dominant employer followed by the services sector, the share of the services sector has been increasing over the years.

The global economic and financial crisis had a dampening effect on the cross border FDI floors. The survey said that in order to maintain the level of FDI into the sector, the major challenge is to retain India’s competitiveness in this sector.

Making in roads into some traditional areas such as tourism and shipping and making forays into globally traded services such as financial services, health care, education and accountancy are the other challenges that needs to be overcome. (ANI)

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