Service industry 'sector of the current millennium': Prez

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SME Times News Bureau | 21 Apr, 2016
Terming the services sector as the "sector of the current millennium", President Pranab Mukherjee on Wednesday said it has emerged as an agent of change for the country and is driving the Indian economy in an inclusive and equitable manner.

"This sector drives the Indian economy in an inclusive and equitable manner. It is the 'sector of the current millennium', in terms of generating employment, skill development, bringing in FDI, enhancing trade and boosting strategic partnerships," Mukherjee said.

He was speaking after inaugurating the Second Edition of Global Exhibition on Services - 2016 at India Expo Centre & Mart, Greater Noida.

The President said India has one of the fastest growing services sectors in the world with annual growth rate of above 9 percent since 2001. The contribution of services sector of India to overall GDP has increased sharply, from 41 percent in 1990-91 to 66 percent in 2014-15.

The event also saw the release of a report on services, which said India's share of global exports in this area was 3.2 percent in 2014-15 -- double the 1.7 percent share of its merchandise exports.

India, thus, is placed eighth in services exports in the world, said the study by KPMG-CII. India also has the second-fastest growing services economy in the world, expanding at an enviable 10 percent per annum, the report added.

"India's young demographic profile, combined with rising literacy rate offers it a significant competitive advantage vis-à-vis other developing economies," said Rajat Wahi, head of the consumer markets unit for KPMG in India.

"India has pride of place as the fastest-growing services sector nation globally. To keep the momentum going, it is critical that stakeholders, investors and policy-makers are best equipped in strategising for the future and tapping the best markets globally," Wahi said.

The President said services sector will remain for India "the key driver of economic growth".

"It has the potential to lay the path for India to migrate from a developing to a developed economy. It is, therefore, important to design and implement a services-driven development strategy within a coherent and comprehensive policy framework ensuring linkages with key policy areas and overall national development objectives."

The services sector encapsulates many areas such as IT, telecommunication, finance, logistics, professional services, entertainment, education, tourism and hospitality, retail and healthcare.

There exists a positive correlation between the extent of liberalisation and growth in different services subsectors in India, Mukherjee said.

"The services that have been liberalised the most in terms of trade and FDI policies have experienced higher growth rates and employment creation opportunities. The results of the services sector post initial era of liberalization warrant that the process of reforms has to be further intensified to fully utilize its potential."

Mukherjee said the services sector of India has been one of the biggest sources of employment generation. The share of employment in services sector in 2011-12 was 28.5 percent which was 4 percent higher than that in the industry sector.

Among the dignitaries present on the occasion were Communications Minister Ravi Shankar Prasad, Commerce Minister Nirmala Sitharaman, Culture, Tourism and Civil Aviation Minister Mahesh Sharma and CII President Naushad Forbes.