Economic Survey: Better regulation important for services sector

NEW DELHI: The Economic Survey on Friday called for better regulation to tap the full potential of the services sector, which accounts for a quarter of total employment in the country.

For the first time, the Survey has dedicated a separate section to the services sector. "Regulatory improvements will also be important, as many domestic regulations and market access barriers could come in the way of fully tapping this growth-accelerating sector," the Economic Survey 2010-11 tabled in Parliament said.

The services sector accounted for 55.2 per cent of the national economic output in 2009-10. In 2009-10, this sector grew by 10.1 per cent and it is expected to record a growth of 9.6 per cent in the current fiscal.

According to the Survey, the services sector contributes to about a quarter of total employment, accounts for a high share of FDI inflows and makes up for one-third of total exports.

However, it said the sector still faces many challenges such as those related to collection of better data and developing a "better coordinated strategy to pull together all the dispersed information".

Other challenges include retaining competitiveness in the IT, ITes and telecommunication areas, as well as making inroads into traditional areas such as tourism and shipping.

"Since there are diverse sectors within services, the issues and policies cannot be separated into watertight compartments," the Survey said.