 "Big-ticket projects to revive growth")
The Economic Survey has recommended a targeted approach to revive the growth story in the services sector. It has identified big-ticket areas with manufacturing and employment linkages, beyond telecom and information technology (IT), to achieve a rebound.
Making India attractive for tourists tops the list of big-ticket services. Building world-class ports in line with modern airports, along with focus on replacing old ships and increasing the fleet strength are among the other measures on the list of deliverables. Foreign direct investment (FDI) in railways, for which the ground has already been set in the rail budget, is another such step.
Also, there is a need to have a nodal agency for services. A portal for services, showcasing India’s competence in non-software services in trade exhibitions and engaging brand ambassadors for the sector have also been proposed. Speeding up disinvestment in services public-sector units (PSUs), collateral-free soft loans to support the cash needs of the sector and tax reforms would go a long way in raising the growth rate.
While barely touching on the controversial multi-brand retail policy, where foreign investment up to 51 per cent was allowed with several conditions in September 2012 during the United Progressive Alliance rule, the Survey points out that several foreign single-brand companies including Brooks Brothers, Roberto Cavalli, Christian Louboutin, Starbucks, and Dunkin’ Donuts have entered India. It goes on to say unfettered flow of goods and services is essential to promote growth, while recommending reduction in controls, multiple organisations and a plethora of orders. The Survey has highlighted the importance of e-commerce, without making any suggestions on allowing FDI there.
Real estate, with a share of 5.9 per cent in India’s GDP, grew by 5.6 per cent in 2012-13. National Housing Bank Residex shows prices of residential units have grown in 24 cities, with 2007 as the base year. Chennai has shown the highest growth at 230 per cent, followed by Pune (135 per cent), Bhopal (123 per cent) and Mumbai (122 per cent). Kochi and Hyderabad prices have dipped by 15 per cent and seven per cent, respectively.
On the whole, services sector grew at 6.8 per cent in FY14, marginally lower than the previous year. The dip was due to deceleration in the growth rate of trade, hotels, restaurants, transport storage and communication. Financing, insurance, real estate and business services showed better growth.
FY15 looks promising for services, especially with the announcement of new airlines such as Tata SIA and Air Asia after a period of withdrawals and losses of aviation companies. The downside risk is the fragile global situation, the Survey cautions. In addition, in the absence of sufficient high growth in agriculture and industry, services will be seriously constrained to sustain growth acceleration.
Making India attractive for tourists tops the list of big-ticket services. Building world-class ports in line with modern airports, along with focus on replacing old ships and increasing the fleet strength are among the other measures on the list of deliverables. Foreign direct investment (FDI) in railways, for which the ground has already been set in the rail budget, is another such step.
Also, there is a need to have a nodal agency for services. A portal for services, showcasing India’s competence in non-software services in trade exhibitions and engaging brand ambassadors for the sector have also been proposed. Speeding up disinvestment in services public-sector units (PSUs), collateral-free soft loans to support the cash needs of the sector and tax reforms would go a long way in raising the growth rate.
While barely touching on the controversial multi-brand retail policy, where foreign investment up to 51 per cent was allowed with several conditions in September 2012 during the United Progressive Alliance rule, the Survey points out that several foreign single-brand companies including Brooks Brothers, Roberto Cavalli, Christian Louboutin, Starbucks, and Dunkin’ Donuts have entered India. It goes on to say unfettered flow of goods and services is essential to promote growth, while recommending reduction in controls, multiple organisations and a plethora of orders. The Survey has highlighted the importance of e-commerce, without making any suggestions on allowing FDI there.
Real estate, with a share of 5.9 per cent in India’s GDP, grew by 5.6 per cent in 2012-13. National Housing Bank Residex shows prices of residential units have grown in 24 cities, with 2007 as the base year. Chennai has shown the highest growth at 230 per cent, followed by Pune (135 per cent), Bhopal (123 per cent) and Mumbai (122 per cent). Kochi and Hyderabad prices have dipped by 15 per cent and seven per cent, respectively.
On the whole, services sector grew at 6.8 per cent in FY14, marginally lower than the previous year. The dip was due to deceleration in the growth rate of trade, hotels, restaurants, transport storage and communication. Financing, insurance, real estate and business services showed better growth.
FY15 looks promising for services, especially with the announcement of new airlines such as Tata SIA and Air Asia after a period of withdrawals and losses of aviation companies. The downside risk is the fragile global situation, the Survey cautions. In addition, in the absence of sufficient high growth in agriculture and industry, services will be seriously constrained to sustain growth acceleration.