Services sector growth slows to 6.17%, dashing hopes of policymakers

The construction sector grew 2.8% in the first quarter of 2013-14, against 7% a year ago

Growth in the services sector, the biggest part of India's economy, slowed to 6.17 per cent in April-June this year against 7.6 per cent in the first quarter of 2012-13, as construction growth dipped sharply during the period. The sector had grown 6.3 per cent in April-March 2012-13.

Though the growth in services came down sequentially and annually, it was better than the 2.7 per cent growth recorded in agriculture and a contraction of 0.86 per cent in industry.

Since industry was expected to do badly, it was mainly services and agriculture that policy makers were pinning their hopes on for better growth.

The construction sector grew only 2.8 per cent in the first quarter of 2013-14, against seven per cent in the corresponding period of previous year.

Trade, hotels, transport and communication services also saw a dip in their growth, from 6.1 per cent last year to 3.9 per cent in April-June this year.    

“Among the services sectors, the key indicators of railways, namely, the net tonne kilometres, have shown a growth rate of 1.8 per cent but passenger kilometres declined by 3.4 per cent,” the Central Statistics Office (CSO) said.

In other transport sectors, passengers handled by civil aviation grew 3.4 per cent, while sales of commercial vehicles, cargo handled at major ports, and cargo handled by civil aviation declined 8.1 per cent, one per cent and 2.1 per cent respectively.

Economic activities which registered significant growth in the first quarter of 2013-14 over the year-ago period were financing, insurance, real estate and business services at 8.9 per cent and community, social and personal services at 9.4 per cent.

“The other key indicators, namely, aggregate bank deposits, and bank credit have shown growth rates of 13.8 per cent, and 13.7 per cent, respectively, as on June. The growth of these two indicators as on June 2012 were 16.5 per cent and 13.5 per cent, respectively,” the CSO said.

Community, social and personal services rose 9.4 per cent in the first quarter of the financial year against 8.9 per cent in the year-ago period and four per cent in the fourth quarter of 2012-13.