Service sector expected to grow more than 9.5 percentSeptember 7th, 2008 - 1:13 pm ICT by IANS
New Delhi, Sep 7 (IANS) Despite an economic slowdown, India’s services sector is expected to grow at more than 9.5 percent this year, according to the Confederation of Indian Industry (CII). The CII’s projection is based on a survey conducted among services sector chief executive officers (CEOs). About 66 percent of the services sector CEOs said the industry would grow above 9.5 percent.
About 94 percent of the CEOs expected employment to increase in health care sector, followed by retail and tourism sectors.
About 66 percent of the participants said employment would increase in IT, IT enabled services (ITES) and telecom sectors, while 64 percent expected employment to increase in financial services.
The major impediments to growth are global economic slowdown, deceleration in the economy and shortage of talent and skills, said the survey.
“The CII snap poll reveals robust services growth expectation during the current year and supports GDP (gross domestic product) growth expectation of eight percent plus,” CII director general Chandrajit Banerjee said.
“Both investment and employment are expected to increase in the services sector despite pressure on profitability during the current year,” Banerjee added.
Regarding the investment expansion for the entire services sector, 87 percent of the CEOs felt that expansion would continue during the current year.
While the growth and investment outlook look healthy, the margins are expected to be under pressure, the poll said.
The main reasons for pressure on margins are high interest rates, stiff domestic competition, increase in staff costs and stiff global competition.