Economic Survey 2017-18 Analysis: Services Sector
Union Finance Minister Arun Jaitley on 29 January 2018 tabled the Economic Survey 2017-18 in the Parliament. The survey examined the current challenges before the Indian economy and suggested policy measures to overcome those challenges.
For the benefit of IAS aspirants, Jagran Josh is providing a detailed sector-wise analysis of the Economic Survey 2017-18. The information will be helpful for prelims, mains and personality test.
In this article, the status of India’s services sector is are explained. This analysis is based on the ‘Services Sector’chapter in the volume 2 of the Economic Survey 2017-18.
IAS Toppers Strategy for Mains Exam
Probable questions for IAS Mains Exam 2018
Q.1. “Services sector is the backbone of the Indian Economy.” Comment
Q.2. “India can achieve inclusive growth only with the development of the services sector.” Critically Analyze.
Status of Services Sector
• The services sector with a share of 55.2 per cent in India’s gross value added continued to be the key driver of India’s economic growth.
• The Government has taken many initiatives in the different services which include digitization, e-visas, infrastructure status to Logistics, Start-up India, schemes for the housing sector, etc.
• As per the UN National Accounts Statistics data, India’s ranking in the services sector improved from 14th position in 2006 to 7th position in 2016, among the world’s 15 largest economies in terms of overall GDP.
• As per the First Advance estimates of national income 2017-18 released by the Central Statistics Office (CSO), services sector growth is expected to be 8.3 per cent during 2017-18, higher than the growth of 7.7 per cent in 2016-17.
• Out of the 32 States and Union Territories(UTs) for which data are released for new base 2011-12 series by CSO, the services sector is the dominant sector, contributing to more than half of the gross state value added (GSVA) in 15 states and UTs. While Delhi and Chandigarh are at the top with over 80 per cent share, while Sikkim is at the bottom with a 31.7 per cent share.
• In the last three years, the Government has undertaken a number of reforms to ensure that India remains an increasingly attractive investment destination, which include announcement of National Intellectual Property Rights (IPR) policy, implementation of GST and reforms for ease of doing business.
• India remained the eighth largest exporter of commercial services in the world in 2016 with a share of 3.4 per cent, which is double the share of India’s merchandise exports in the world at 1.7 percent.
• Lower growth in services exports than in imports led to a decline in net services receipts in 2015-16 and 2016-17. Net services receipts rose by 14.6 per cent during April-September of 2017-18. Net surplus in services financed about 49 per cent of India’s merchandise deficit during the first half of the FY 2017-18 and cushioned the current account deficit.
• The Baltic Dry Index, a freight index and a good proxy for the robustness of trade and shipping services which fell from a peak of 11,793 on 20 May 2008 to a low of 290 on 11 February 2016, improved since then and was at 1,164 on 17 January 2018.
The Tourism sector has been performing well with Foreign Tourist Arrivals (FTAs) growing at 9.7 per cent to 8.8 million and Foreign Exchange Earnings (FEEs) at 8.8 per cent to USD 22.9 billion in 2016.
Amongst centrally protected ticketed monuments, for domestic visitors, Taj Mahal was the most visited monument in 2016 followed by Qutub Minar and Red Fort, while for foreign visitors Taj Mahal was the most visited monument, followed by Agra Fort and Qutub Minar.
According to the Global Competitiveness Report 2017-18, India’s capacity for innovation has been lower than that of many countries like the USA, the UK, South Korea, but better than China’s. In terms of university– Industry collaboration on research and development (R&D), India ranks better than all other BRICS countries and in terms of availability of scientists and engineers, it ranks better than other BRICS countries except China. BRICS stands for Brazil, Russia, India, China and South Africa.
The government has taken many initiatives to promote the R&D sector in India including the establishment of the Atal Innovation Mission (AIM) in the National Institution for Transforming India (NITI) Aayog.
Indian Space Programme contributes to national development, through the application of space technology, comprising communication, navigation and earth observation to address issues related to societal development and strategic requirements.
Indian Space Research Organisation (ISRO) is pursuing a project to support ASEAN Member states including Myanmar to receive and process data from Indian remote sensing satellites (Resourcesat-2 and Oceansat-2) and also to provide training in space science, technology and applications for the benefit of the ASEAN member countries.
In the case of Satellite Launching, as of March 2017, PSLV had successfully launched 254 satellites. This includes 37 National Satellites, 8 student satellites built by universities/ academic institutions, one re-entry mission and 209 foreign satellites from 29 Countries.
Foreign exchange earnings of India from the export of satellite launch services increased noticeably in 2015-16 and 2016-17 to Rs 394 crore and Rs 275 crore from Rs 149 crore in 2014-15. Consequently, India’s share in global satellite launch services revenue has also increased to 1.1 per cent in 2015-16 from 0.3 per cent in 2014-15.
In future, Antrix foresees greater utilization of PSLV, GSLV and GSLV-Mk-III launch services by the international community for launching their Low Earth orbit (LEO) satellites.
The growth of India’s services sector is expected to improve in 2017-18 vis-a-vis 2016-17. The prospects look bright with good performance of sub sectors like Tourism, Aviation, and Telecom, robust services trade performance with even growth of major services like software returning to positive territory. The downward risk, however, lies in the external environment for software and business services.