Services Contributed Over 50% to GDP

The Services Sector generated more than half of India’s GDP, according to the Economic Survey 2021-22, which was submitted in Parliament today by Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitharaman. The Services Sector, according to the survey, has been steadily improving in the first half of the current fiscal year. “Overall, the Services Sector expanded by 10.8% YoY in the first half (H1) of 2021-22,” according to the Survey.

Although the spread of the Omicron variant brings a degree of uncertainty in the near term, especially in segments that require human contact, the overall Services sector GVA is expected to grow by 8.2% in 2021-22, according to the Survey, the spread of Omicron variant brings a degree of uncertainty in the near term, especially in segments that require human contact.

FDI In Services

According to the Economic Survey, India’s Services Sector was the greatest receiver of FDI inflows. FDI equity inflows into the Services Sector were $ 16.73 billion in H1 2021-22. “Strong FDI inflows were seen in the financial, business, outsourcing, R&D, courier, tech testing & analysis, and education sub sectors,” according to the survey.

Trade In Services

According to the Economic Survey, India is the world’s leading exporter of services. In 2020, it remained among the top ten service exporter countries, with its share of global commercial services exports rising to 4.1 percent from 3.4 percent in 2019. “In comparison to product exports, the impact of Covid-19-induced worldwide lockout on India’s services exports was less severe,” the Economic Survey observed. Despite the impact of Covid-19 on transport exports, the Survey found that double-digit growth in gross service exports, helped by software, business, and transportation services, resulted in a 22.8 percent increase in net service exports in H1 2021-22.

Sub-Sector Wise Performance

IT-BPM (Information technology – Business Process Management) Sector

The IT-BPM sector is a large portion of India’s services, according to the Economic Survey. According to NASSCOM’s early forecasts, IT-BPM revenues (excluding e-commerce) would reach $ 194 billion in 2020-21, up 2.26 percent year on year, with 1.38 lakh new jobs. IT services account for the main share (>51 percent) of the IT-BPM sector, according to the survey. According to the Economic Survey, a number of policy initiatives have been implemented in the sector over the last year to encourage innovation and technology adoption, including the relaxation of Other Services Provider regulations, Telecom Sector Reforms, and Consumer Protection (e-commerce) Rules, 2020. According to the Survey, “this would considerably boost access to talent, increase job creation, and drive the sector to the next level of growth and innovation.”

Startups and Patents

According to the Economic Survey, the number of startups in India has increased dramatically over the last six years, with the majority of them belonging to the services sector. As of January 10, 2022, India had more than 61,400 startups registered. In addition, according to the survey, India will have a record number of unicorn startups (44) in 2021. Intellectual property, notably patents, was also noted in the Economic Survey as being important to the knowledge-based economy. According to the Survey, “the number of patents submitted in India increased to 58,502 in 2020-21 from 39,400 in 2010-11, and the number of patents granted in India increased to 28,391 from 7,509 during the same time.”

Tourism Sector

According to the Economic Survey, the tourist sector contributed significantly to GDP growth, foreign exchange profits, and employment; nevertheless, the Covid-19 pandemic crippled global travel and tourism, including in India. In addition, according to the survey, the revival of international tourism will rely heavily on a coordinated response across countries in terms of travel restrictions, standardised safety and sanitary regulations, and effective communication to help restore consumer confidence. Special foreign flights have been running under the Vande Bharat Mission, which is currently in its 15th phase and has carried over 63.55 lakh people, according to the survey.

Ports, Shipping and Waterways Services

The growth of ports, according to the Economic Survey, is critical for the economy. By volume, ports handled 90 percent of export-import goods and 70 percent by value. The overall cargo capacity of all ports, according to the survey, climbed to 1,246.86 million tonnes per annum (MTPA) in March 2021 from 1052.23 MTPA in March 2014. In addition, despite being hit by disruptions caused by Covid-19 in 2020-21, Port traffic increased by 10.16 percent in 2021-22, indicating a growth of 10.16 percent from April to November 2021. The Sagarmala Programme, a flagship programme aimed at fostering port-led development in the country, was also highlighted in the survey, with 802 projects valued Rs. 5.53 lakh crore falling under its purview.

Space Sector

The Indian space programme has evolved dramatically since its inception in the 1960s, according to the Economic Survey. In the space industry, capabilities have been established in all sectors, including indigenous space transportation systems and space assets, such as a fleet of satellites that cater to varied societal needs. According to the survey, the government implemented a number of reforms in the space sector in 2020, with the goal of including the private sector in the provision of space-based services.