India has the second fastest growing services sector in the world with a compound annual growth rate at 9%, just below China's 10.9%, during 2001 to 2012, the Economic Survey said today.
Among the world's top 15 countries in terms of GDP, India ranked 10th in terms of overall GDP and 12th in terms of services GDP in 2012, it said.
"India has the second fastest growing services sector with CAGR at 9%, just below China's 10.9%, during the last 11-year period from 2001 to 2012," the survey said.
It said that services share in world GDP was 65.9% but its share in employment was only 44% in 2012.
In India, the services sector had a high share in income at 56.9% in 2012 with a lower share of 28.1% in employment, it added.
In 2013-14 the growth rate of the services sector at 6.8% is marginally lower than in 2012-13. This is due to deceleration in the growth rate of the combined category of trade, hotels, restaurants, transport, storage and communications.
The survey, which was tabled in Parliament today, said that services in India are emerging as a prominent sector in terms of contribution to national and states' incomes, trade flows, FDI inflows and employment.
Further, it said that the immediate challenge in this sector is revival of growth.
India's services sector which was growing at a steady rate of over 10% since 2005-06 has shown subdued performance in the last three years.
Revival, it said, could be achieved through reforms and speeding up of the policy decision making, a targeted approach with focus on big ticket services.
"Some services like software and telecom were big ticket items that gave India a brand image in services. While further focus on these services is needed to retain and further our lead, the time has come to focus on some other high potential big ticket items that have high manufacturing-sector and employment linkages," it added.
Going forward, it said, 2014-15 seems to augur well for the services sector with expansion in business activity in India.
"There are also signs of revival in growth of the aviation sector with the announcement of new players like Air Asia and Tata-SIA Airline after a turbulent period of withdrawals and losses by some airlines," it added.
Indications of revival in the world GDP and trade growth in general and of developed countries in particular, could help in revival of the tourism and shipping sectors.
"With a stable government in place and growing optimism which could translate into investment and growth, some quick reforms and removal of some barriers and obsolete regulations in the services sector could help. The downside risk however is the fragile global situation," it said.
