Services sector set to grow 8.2% in FY22

Bengaluru: Services sector registered a steady recovery during the first half of the current fiscal year and contributed 50 per cent to India's GDP during this period, the Economic Survey 2021-22 tabled in the Parliament on Monday said.

Overall, the services sector grew by 10.8 per cent year-on-year (YoY) in first half (H1) of 2021-22.

"The overall services sector GVA is expected to grow by 8.2 per cent in 2021-22, although the spread of Omicron variant brings in a degree of uncertainty for near term, especially in segments that require human contact," the survey noted.

Services Sector continued to be the largest recipient of FDI inflows in the country. During the first half of ongoing fiscal year, this sector received $16.73 billion FDI equity inflows. "Financial, business, outsourcing, R&D, courier, tech testing & analysis along with education sub sector witnessed strong FDI inflows," the Economic Survey noted.

India remained among the top ten services exporter countries globally in 2020, with its share of world commercial services exports increasing to 4.1 per cent in 2020 from 3.4 per cent in 2019.

"The impact of Covid-19 induced global lockdown on India's services exports was less severe as compared to merchandise exports", stated the Economic Survey.

It noted that Covid pandemic impacted the transport exports. However, double-digit growth in gross exports of services was possible owing to healthy exports growth in software, business and transportation services, leading to an increase of 22.8 per cent in net exports of services in H1 of FY22.

IT-BPM sector continued to play its critical role in boosting services sector exports. During 2020-21, according to NASSCOM's provisional estimates, IT-BPM revenues (excluding e-commerce) reached $194 billion, growing by 2.26 per cent YoY, adding 1.38 lakh employees.

Within IT-BPM sector, IT services constitutes the majority share of 51 per cent during this period.

The Economic Survey observed that a number of policy initiatives have been undertaken to drive innovation and technology adoption in the sector, including relaxation of Other Services Provider regulations, Telecom Sector Reforms and Consumer Protection (e-commerce) Rules, 2020 during this year. "This would significantly expand access to talent, increase job creation and catapult the sector to the next level of growth and innovation", it noted.

Hailing the substantial growth seen in the startup ecosystem, the survey said that more than 61,400 startups have been recognized in India as of January 10, 2022.

Further, the Survey stated that India had a record number of startups (44) reaching unicorn status in 2021. "The number of patents filed in India has gone up to 58,502 in 2020-21 from 39,400 in 2010-11 and the patents granted in India has gone up to 28,391 from 7,509 during the same period," it said.

On the tourism sector, the Economic Survey said pandemic had a debilitating impact on world travel and tourism everywhere, including India. The Survey stated that special international flights have been operating under the Vande Bharat Mission which was currently in its 15th phase and had carried over 63.55 lakh passengers. It, however, noted that resumption of international travel would depend on the coordinated response of countries in this regard.

Despite the pandemic, the port traffic had picked up in FY22 registering a growth of 10.16 per cent during April-November 2021, the Economic Survey said.

The Survey noted that the government undertook various reforms in space sector in 2020 to promote private sector participation. These reforms included empowering New Space India Limited (NSIL) and changing the present supply-based model to demand-driven model; creating an independent nodal agency- Indian National Space Promotion and Authorization Centre (IN-SPACe) under the Department of Space.