Service sector to grow by 6% in 2013-14: study
Updated: Feb 01, 2014 04:45:33pm
New Delhi, Feb 1 (KNN) India’s services sector being pulled down by a dismal impact of manufacturing may grow just by about 6 per cent in the current financial year, falling significantly from 6.8 per cent in 2012-13 as some of the key segments like transport, hotels and construction take a hit from the slowdown, according to a study.
“The services sector which contributes over 60 per cent to the country’s GDP may expand a shade lower or above 6 per cent in the fiscal 2013-14. The spill over from the manufacturing is clearly visible on the important segments of trade, transport and construction,” an ASSOCHAM study said.
Illustratively, trade, hotels, transport and communication could manage a growth of four per cent in the first half of fiscal 2013-14 against 6.4 per cent in the same period last year. Likewise, construction could grow at only 3.5 per cent as compared to 5.1 per cent, it said.
Since the manufacturing stays in the negative zone, it has hit the trade segment in services significantly, also reflecting overall demand compression.
“Vibrancy in trade –both wholesale and retail is missing and would return only when the overall industrial growth returns along with consistent agriculture expansion for at least two-three years. Both industrial production and agriculture along with exports affect the trade,” the paper said.
However, like in the manufactured and Agri goods, the services sector will do well in the overseas markets and are likely to rake in over USD 155 billion through global shipments in fiscal 2013-14 against USD 145.7 billion in the previous financial year, the study projected.
Weakening of rupee along with other positives , from export point of view, like pick up in the US economy and in some parts of Europe, are retrieving the confidence for India’s services exports, which are largely driven by the IT and ITES, built both on onshore and offshore models.
One of the major positive outcome of this development will be a significant increase in employment generation in the IT and ITES in the next financial year since in the current fiscal, the focus was more on cost cutting and driving higher per capita efficiency in the wake of uncertainties in the world economy.
“As the situation improves further in the world economy, the services exports would further rise in the next fiscal, giving a much-needed momentum to India’s Gross Domestic Product (GDP),” Secretary General ASSOCHAM D S Rawat said, releasing the paper.
As for the current fiscal, the paper noted that the services sector recorded the lowest growth of 5.8 per cent in second quarter of 2013-14 as the crucial segments of trade, hotels, restaurant, transport and communication along with community services showing laggard progress in the wake of overall slowdown.
The spill over is evident from the manufacturing sector which has declined by 0.6 per cent between April and November this fiscal.
As many as half the numbers of 22 industries within manufacturing have shown a drop in production. These included basic metals, machinery and equipment, radio, TV and communication equipment, motor vehicles and fabricated metal products.
“All these are highly connected with the transport sector”, the ASSOCHAM study noted.
“The services sector which contributes over 60 per cent to the country’s GDP may expand a shade lower or above 6 per cent in the fiscal 2013-14. The spill over from the manufacturing is clearly visible on the important segments of trade, transport and construction,” an ASSOCHAM study said.
Illustratively, trade, hotels, transport and communication could manage a growth of four per cent in the first half of fiscal 2013-14 against 6.4 per cent in the same period last year. Likewise, construction could grow at only 3.5 per cent as compared to 5.1 per cent, it said.
Since the manufacturing stays in the negative zone, it has hit the trade segment in services significantly, also reflecting overall demand compression.
“Vibrancy in trade –both wholesale and retail is missing and would return only when the overall industrial growth returns along with consistent agriculture expansion for at least two-three years. Both industrial production and agriculture along with exports affect the trade,” the paper said.
However, like in the manufactured and Agri goods, the services sector will do well in the overseas markets and are likely to rake in over USD 155 billion through global shipments in fiscal 2013-14 against USD 145.7 billion in the previous financial year, the study projected.
Weakening of rupee along with other positives , from export point of view, like pick up in the US economy and in some parts of Europe, are retrieving the confidence for India’s services exports, which are largely driven by the IT and ITES, built both on onshore and offshore models.
One of the major positive outcome of this development will be a significant increase in employment generation in the IT and ITES in the next financial year since in the current fiscal, the focus was more on cost cutting and driving higher per capita efficiency in the wake of uncertainties in the world economy.
“As the situation improves further in the world economy, the services exports would further rise in the next fiscal, giving a much-needed momentum to India’s Gross Domestic Product (GDP),” Secretary General ASSOCHAM D S Rawat said, releasing the paper.
As for the current fiscal, the paper noted that the services sector recorded the lowest growth of 5.8 per cent in second quarter of 2013-14 as the crucial segments of trade, hotels, restaurant, transport and communication along with community services showing laggard progress in the wake of overall slowdown.
The spill over is evident from the manufacturing sector which has declined by 0.6 per cent between April and November this fiscal.
As many as half the numbers of 22 industries within manufacturing have shown a drop in production. These included basic metals, machinery and equipment, radio, TV and communication equipment, motor vehicles and fabricated metal products.
“All these are highly connected with the transport sector”, the ASSOCHAM study noted.
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