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Informist, Monday, Sep 23, 2024

 

By Krity Ambey

 

NEW DELHI – NITI Aayog is preparing to pitch to the Centre a proposal to set up a separate ministry dedicated to fostering and expanding the services sector in India and to encourage exports, a senior official said. The move is likely to be a key priority for achieving India's 2047 vision, the official added. India aims to become a developed nation by 2047, which will mark the 100th anniversary of its independence.

 

The new ministry will be responsible for overseeing the services sector and streamlining regulatory frameworks to drive innovation, the official told Informist. It will help facilitate ease of doing business, and create a conducive environment for entrepreneurship and job creation, the official added.

 

The services sector accounted for about 55% of India's Gross Value Added in 2023-24 (Apr-Mar). Within this, the major contributors were information technology services, financial services, and tourism and hospitality services.

 

However, there is a need to look beyond IT services when talking about the services sector, the official said. The envisaged ministry will work towards broadbased growth of all segments of the services sector, including the growth of professional services, the official added.

 

"The fastest growing services segment in India is not IT, it is actually professional services," the official said. The new ministry will collaborate with other ministries, like the education ministry and health ministry, to make India a global provider of professional services--education, health, consultancy--the official said.

 

Discussions on setting up the ministry are at a very nascent stage, the official said. "If not an entire ministry, we aim to at least set up a dedicated department or agency for the sector."

 

While the World Trade Organization has 16 categories and 120 sub-categories for services, India hasn't yet optimised the full potential of all segments of the service sector, the official said. India's service exports grew by a whopping 27.8% in 2022-23 to $325.33 bln before the growth decelerated to 4.8% in 2023-24 due to a slump in global demand. Computer services and business services exports accounted for about 73% of the service exports.

 

India's service sector has grown at a steady pace in the last three years after contracting 8.4% in the pandemic-hit year of 2020-21. The sector grew 7.6% in the last fiscal year. 

Going forward, sustaining positive demand trends and effectively managing rising costs and competitive pressures will be critical for the growth and resilience of the service sector. "In the short run, the tentative global economic outlook and commodity price uncertainties present a serious challenge to input costs and demand for services," the Economic Survey for 2023-24 said.  End

 

US$1 = 83.52 rupees

 

Edited by Namrata Rao

 

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