Services sector will prop growth rate: Industry reportDecember 28th, 2008 - 2:54 pm ICT by IANS
New Delhi, Dec 28 (IANS) Despite the global economic slowdown, some segments of India’s services sector, including IT, education and organised retail, retained “high” growth rate of 10-20 percent this fiscal, an industry lobby survey said here Sunday. The survey by the the Federation of Indian Chambers of Commerce and Industry (Ficci ) said: “Although the slowdown is expected to make a further dent in the growth of some segments of the sector, given its overall contribution of 63 percent to the GDP (gross domestic product), the services sector growth is expected to help maintain a healthy GDP growth this fiscal.”
According to the survey, the number of wireless subscribers grew 50 percent in April-November compared to the same month last year. Internet subscribers grew 26 percent and broadband subscribers went up 87.7 percent during the period, it added.
During 2007-08, the services sector grew 10.7 percent, higher than the 8.8 percent growth in the manufacturing and 4.5 percent growth in the agriculture sectors.
Sectors like housing finance, entertainment and media industry, IT and IT-enabled services, organised retail trade, education and training have seen a “high growth of 10-20 percent” in April-November, the report said.
Railway’s revenue earning from passenger traffic and freight traffic, and exchange earnings from foreign tourists also reported a similar growth rate.
However, air passenger traffic, fixed line subscriber, assets mobilised by mutual funds and assets under management and insurance premium saw negative growth.
“Along with the issues pertaining to direct and indirect taxes, the incidence of service tax are among the common problems being faced by almost all the services sectors, including civil aviation, port and shipping, tourism and telecom,” the report said.
The rate of service tax has been increased consecutively from 5 percent to 8 percent in April 2003, further to 10 percent and now at 12 percent. With education cess of 2 percent and higher education cess of 1 percent, the total incidence comes to 12.36 percent for almost all the services sectors.
“There is a need for rationalisation of taxes especially of the sales tax to encourage growth of services sectors,” the survey report suggested.