NEW DELHI: "Despite the drought and a not-so-favourable international environment, India's service economy continued to grow fast in 2002-03," the Confederation of Indian Industry (CII) said in the quarterly survey of its services council, comprising affiliated associations and large member companies. "The fast growing service sectors have maintained their pace in the last financial year, often increasing their pace from the previous year. These include cellular telephones and housing finance. Even the moderately growing sectors did better than last year." The CII survey has revealed that the fastest growing sector was cellular telephones, which grew by more than 86 percent last year. This is faster than the previous year when the industry grew by 80 percent. "The forecast for the coming year is, however, a little lower at 65 percent," states the report. The Central Statistical Organisation (CSO) of the ministry of statistics supports the CII data. The CSO has estimated that the combined "communications, hotels, trade, and transportation" sectors grew by 7.8 percent in 2002-03. Similarly, the combined rate of growth of the "business services, financing, insurance, and real estate" sectors was 6.5 percent. The data reveals that after mobile telephones, the next fastest growing service sector was housing finance. Encouraged by the soft interest rates, home loans offtake rose by 42 percent during 2002-03, which is higher than the previous year's 40 percent. This sector is expected to continue the growth trend with a 35 percent rise in the current fiscal, states CII. The survey, conducted before the outbreak of the Severe Acute Respiratory Syndrome (SARS) across Asia, estimated a 15 to 20 percent increase in tourist arrivals. The SARS epidemic is expected to impact this growth. During 2002-03, the tourism industry saw an encouraging growth of 15 percent giving a boost to the hotel industry after a 25 percent downturn in the previous year. In the case of software industry, which maintained previous year's growth of 20 percent, there was a marginally higher growth in exports. As against a 29 percent rise in software exports the previous year, during 2002-03 there was a 30 percent rise in overseas sales to reach $7 billion. This year software exports are forecast to grow at 25-35 percent. The hardware industry had a moderate year with a 12 percent growth, as against 15 percent in the previous year. Hardware exports however registered a robust 20 percent growth in 2002-03, up from 16 percent the previous year. The growth forecast for the sector in the current year is 15 percent. The construction industry too had a good year with 12 percent, which is more than double the previous year's rate of 5.3 percent. Unfortunately, project exports saw a slower growth rate. As against project exports growth of 26 percent in the previous year, during 2002-03 it dropped to 10 percent. The forecast for 2003-04 is around 10-15 percent. The recovery in manufacturing and services was aided by a good performance in power generation. The thermal power sector also grew by a reasonable 6.5 percent last year, which is double the previous year's 3.2 percent. In the current year too thermal output is likely to rise by between 5 to 10 percent. On the hydropower sector, however, the drought has had a negative impact with the output falling by 8.4 percent. This comes on top of a 0.6 percent fall in hydel power in the previous year. "India's rising imports and exports was reflected in a good year for the air cargo industry," states CII report. Exports by air cargo rose by 9 percent last fiscal year, whereas in the previous year they had fallen by four percent. Imports by air cargo rose by 12 percent in 2002-03, reversing the two percent drop in the previous year. The outlook for this year is a moderate five to 10 percent growth. The leasing industry is the only services sector that has been having a continuing poor growth. It witnessed a five percent drop in growth preceded by an eight percent drop in the previous year. This year too the outlook is negative, says the CII report, "because of high taxes, restrictions on non-banking financial companies, and weaknesses in India's debt recovery system".
Source: IANS