Services sector moderates to 7.5 per cent in 2018-19: Economic Survey

FDI equity inflows into services sector eases to US$ 28.26 billion.

According to the Economic Survey 2018-19 tabled in in Parliament today, services sector accounts for 54 per cent of India's Gross Value Added (GVA). Its growth rate moderated to 7.5 per cent in 2018-19 from 8.1 per cent in 2017-18. The segments that saw deceleration are tourism, trade, hotels, transport, communication and services related to broadcasting, public administration and defence. Financial, real estate and professional services category accelerated. India received 10.6 million foreign tourists in 2018-19 compared to 10.4 million in 2017-18. Foreign exchange earnings from tourism in India stood at US$27.7 billion in 2018-19 compared to US$28.7 billion in 2017-18. The IT-BPM (Business Process Management) industry grew by 8.4 per cent in 2017-18 to US$167 billion and is estimated to have reached US$181 billion in 2018-19.

Despite the recent growth moderation, services sector growth continues to outperform agriculture and manufacturing sector growth, contributing more than 60 per cent to total GVA growth. Economic Survey says that Services exports have slowed somewhat during April-December 2018 after witnessing strong performance in 2017-18 (April-December) by sub-sector, exports of transport services have maintained strong momentum during 2017-18 (April-December) and April-December, 2018, supported by strengthening merchandise trade activity, while exports of Computer & ICT services have continued to recover steadily. On the other hand, travel receipts have slowed somewhat during April-December, 2018 after posting strong growth in 2017-18 (April-December), which is in line with the moderation in foreign tourist arrivals during this period.

Economic Survey says that FDI equity inflows into the services sector accounted for more than 60 per cent of the total FDI equity inflows into India. During 2018-19, FDI equity inflows into services sector fell by US$696 million or 1.3 per cent from the previous year to about US$28.26 billion, which is in line with the small decline witnessed in overall FDI inflows into India. This was driven by weaker FDI inflows into sub-sectors such as telecom, consultancy services, air and sea transport, which offset the strong inflows witnessed in education, retail trading and information & broadcasting.

Economic Survey says that Tourism sector is a major engine of economic growth that contributes significantly in terms of GDP, foreign exchange earnings and employment. In India, the Tourism sector had been performing well with Foreign Tourist Arrivals (FTAs) growing at 14 per cent to 10.4 million and Foreign Exchange Earnings (FEEs) at 20.6 per cent to US$28.7 billion in 2017-18. However, the sector witnessed a slowdown in 2018-19. The Foreign Tourist Arrivals (FTA) in 2018-19 stood at 10.6 million compared to 10.4 million in 2017-18. The growth rate of FTAs declined from 14.2 per cent in 2017-18 to 2.1 per cent in 2018-19. Economic Survey says that The Indian IT-BPM industry grew by 8.4 per cent in 2017-18 to US $167 billion (Excluding e-commerce but including hardware) from US$154billion in 2016-17, as per NASSCOM data.

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