Service industry in India

The services sector has been at the forefront of the rapid growth of the Indian economy, contributing nearly 63 per cent of the GDP in 2007-08. The sector has come to play an increasingly dominant role in the economy accounting for 59.6 per cent of the overall average growth in GDP in the last eight years between 2000-01 and 2007-08. As per the Central Statistical Organisation, the services sector has continued to grow in the fourth quarter of 2008-09. Trade, hotels, transport and communication grew 6.3 per cent in January-March 2009 from a year earlier, vs. 5.9 per cent in October-December 2008. Financing, insurance, real estate and business services grew an annual 9.5 per cent in January-March, 2009 vs. 8.3 per cent in October-December 2008. Lead indicators suggest that the pace of expansion in the services sector activity is likely to be sustained even in the next financial year. Foreign tourist arrivals (FTAs) during January to June 2009 were 2.5 million. Railways freight traffic increased to 833.03 million tonnes during fiscal 2008-09 from 794.21 million tonnes carried during 2007-08, an increase of 4.89 per cent. At the end of April 2009, the total number of telephone connections reached 441.47 million, registering an overall tele-density of 37.94. Cargo handled at major ports during April–December 2008–09 has been 391.80 MT as against 378.82 MT in the corresponding period last fiscal. The prospects for growth in the Indian services sector over the next year continues to be robust, according to a survey by KPMG, conducted across the BRIC (Brazil, Russia, India and China) countries in spring 2009. The survey revealed that 31.3 per cent Indian companies saw their activity levels improving. Around 37 per cent forecast new order growth in one year‘s time, compared with 16 per cent that anticipate a fall. Even capital expenditure at Indian services firms is anticipated to rise in the year ahead, with 43 per cent of companies saying they plan to increase spending on fixed assets. Revenues are expected to grow by 31.1 per cent of firms, while 32.5 per cent believe their profits will increase.

Courtesy: CII website