Indian services sector back to pre-slowdown level

NEW DELHI - The Indian services industry is back to its pre-slowdown level, with many of its key sectors reporting double digit growth, says a Confederation of Indian Industry (CII) survey.

“Out of 51 sectors surveyed, 13.72 percent of the sectors have recorded excellent growth of more than 20 percent in 2009-10. This is clearly an improvement over the previous fiscal during which only 5.88 percent had an excellent growth rate,” said the survey.

Another 43.13 percent of the sectors witnessed 10-20 percent increase in output in the fiscal ended March 2010, compared to 41.17 percent in the previous year.

The report, which was based on the responses of more than 350 service-related industry associations, organisations and companies in both the private and public sectors, said the services sector clocked higher growth in the third and last quarters of 2009-10.

“The services sector has performed better during 2009-10, mainly on the back of the stimulus package provided by the government and continuance of the incentive measures including retaining service tax at 10 percent in the union budget,” according to CII director general Chandrajit Banerjee.

About 41.17 percent of the 51 sectors said growth levels were now up to 10 percent, while those reporting a fall in output slipped to a meagre 1.96 percent.

“The share of sectors recording negative growth rate has significantly declined from 17.65 percent in 2008-09, a clear sign of improvement,” said the report.

According to the survey, the telecom and mutual fund industries have emerged as the biggest contributors in the growth of the services industry, both seeing growth rates in excess of 20 percent in 2009-10.

Others like air passenger traffic, retail trade, advertising, live entertainment, courier and logistics industry, healthcare, education and training services grew between 10 and 20 percent.

The industry chamber in a statement said the government had to simplify tax structures across the country, make access to credit easier and develop infrastructure if services were to continue on this high growth trajectory.

“The issues pertaining to low or no access to credit, high input cost, security risks for mega projects in sensitive areas, skills gap and manpower shortage, remain the constraining factors hurting growth,” it said.