Press Trust of India Posted online: Thursday, October 05, 2006 at 1255 hours IST Updated: Thursday, October 05, 2006 at 1628 hours IST
New Delhi, October 5: Prime Minister Manmohan Singh on Thursday said the government is considering setting up a high level group to make the service sector more competitive in the wake of emerging global opportunities.
"Sectors that have not been exposed to sufficient competition, where regulatory framework is weak and have failed to make a big impact on the economy," Singh said while inaugurating the Exposition on Trade in Services.
The government was committed to sustaining the rapid growth of the service sector and the UPA coalition had its "job cut out", he said.
Prime Minister said services like Health, Legal, Higher Education and Tourism can have the same growth potential as IT "and in all these areas we have core competence that could be tapped successfully to boost exports."
"We are considering setting up a high level group in the planning commission to look into all aspects influencing the performance of the service sector and suggest policy measures to sustain its competitiveness in the coming years," he said.
The Commerce Ministry has already floated consultation papers for liberalising legal services and education.
Prime Minister said huge investments were needed for setting up more universities, professional colleges and nursing schools, as this was necessary to feed the emerging international and domestic demand.
He said the country needed a policy regime that facilitated and promoted investment, which had to come from public and private sectors, in education services.
"I am told that three billion dollars is spent annually by students going from India to study abroad. This could be easily retained in India to expand educational facilities to meet everyone needs," Singh said.
With increase in integration of Indian economy with the global economy, there was a need for expertise in international, commercial and third country law, he said.
"For this a more open legal sector is necessary," he said.
On health services, the Prime Minister said it was an emerging area, which held immense potential for the country. In particular, medical outsourcing and tourism provided an opportunity for the health sector.
"For this an accreditation mechanism for hospitals and laboratories need to be established," he said adding there was a need to develop standards that meet international customer requirements," Singh said.
Prime Minister said US, China, Japan and Russia were estimated to be short of 42 million people of working age group by 2020. Against this India would have surplus of 47 million working age people and to avail the opportunities, India would have to expand its education system.
"However, to translate the demographic dividend in to development dividend we have to expand our education system and improve our skill building abilities. This is an urgent priority that we need to attend to," Singh said.
Prime Minister also emphasised on focussing on the service activity regarding remittances from abroad. "The largest single item in our export basket is the remittances sent back home by workers in the foreign countries. Globally, the totally remittances to developing countries exceed FDI inflows and are twice the official development assistance," he said while recalling the huge remittances by Indian immigrant workers. Prime Minister said by 2010 as much as 110 billion dollars of business was estimated to be off-shored and India was in a position to capture half this market.
"The direct and indirect employment impact (of this) could be over one crore jobs within five years and it could contribute an additional one per cent a year to our GDP," Singh said.
Earlier speaking at the meeting organised UNCTAD and FIEO, Commerce and Industry Minister Kamal Nath said service sector was registering a robust growth across the world and India accounted for 60 per cent of the world's output during last decade and 30 per cent of the employment.
He said service sector exports from India grew to 60 billion dollars in 2005-06 and accounted for 37 per cent of the total exports. Services grew 10 per cent, while exports grew 20 per cent, the Commerce Minister said adding the services accounted for 54 per cent of the country's GDP.
Recognising the importance of the service sector to India's economy a Services Export Promotion Council had been set up, which would take up certain services that required a push, Nath said. He said India would become an index of quality and competitiveness in IT in next few years.
Earlier Prime Minister observed that unlike in the manufacturing sector where the developed world had a 'historic' lead, services sector was where the developing world had not suffered a handicap and had been able to compete effectively.
"It would not be an exaggeration to say that the success of the service sector in India and elsewhere is changing the world economic order," he said.
Singh said the most commonly known success story in India has been in Information Technology and BPO services.
"This has been the result of the IT revolution, the consequent desegregation of the service delivery processes, the technological revolution in telecommunications and the ability to deliver services from a distance," he said.
Singh said while all efforts are being made to boost agricultural and industrial growth, services would continue to bear a proportionately higher burden of propelling "our economy to a higher growth trajectory".
He said on the global plane, the service sector had seen a robust growth, benefiting all countries. It accounted for 60 per cent of the world's output, a third of global employment and a fifth of world's trade, he said adding the growth in trade in services is a recent phenomenon.
New Delhi, October 5: Prime Minister Manmohan Singh on Thursday said the government is considering setting up a high level group to make the service sector more competitive in the wake of emerging global opportunities.
