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Informist, Monday, Aug 19, 2024

MUMBAI – The results from services and infrastructure outlook survey suggested that the spare capacity of Indian services sector was in the range of 11-14% during the three-year period from 2021-24, a Reserve Bank of India staff paper has said.

Given that the services sector is a major contributor to India's GDP, a strong need for estimating the capacity utilisation or alternately the spare capacity for the sector was felt, the paper said.

"Information on spare capacity in the services sector along with the capacity utilisation for the manufacturing sector can strengthen inputs for the understanding of inflation and output dynamics and for policy formulation," the paper said.

The views expressed in the paper, authored by RBI officials, do not necessarily reflect those of the central bank.

A comparison of the spare capacity for manufacturing in India with the survey outcome on the services spare capacity reveals that the spare capacity for manufacturing sector in India exceeds that in the services sector across all quarters since Jan-Mar 2021.

The paper said that the spare capacity estimates thus reveal a fair idea about the performance of the services sector and its potential response to additional demand in the sector.  End

Reported by Richard Fargose

Edited by Deepshikha Bhardwaj

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