CII study projects over 7 per cent growth in services sector

NEW DELHI AUG. 10. As the country targets six per cent economic growth this fiscal, services sector is projected to grow at 7-7.5 per cent, thanks to the impressive growth in most of the sectors led by the cellular phones sector which witnessed a whopping 115 per cent subscriber growth rate in April-June 2003 over the same period last year, according to a Confederation of Indian Industry (CII) study.

Of the eight sectors surveyed by the CII and ASCON, three recorded more than 20 per cent growth, four dwindled between 10 and 20 per cent while only the leasing industry had a dismal show as its growth slid by two per cent. The sector would continue to be in black in the coming months, the main reason being the Reserve Bank of India's restrictive growth policies, the survey said.

Even as the cellular phones sector proved to be the fastest growing in the first quarter this fiscal, its performance was better in April-June 2002 at 164 per cent. The overall growth rate was 90 per cent in April-March 2002-03 over the same period in 2001-02. This trend was expected to continue though certain constraints for the sector had been identified by the survey.

The housing finance sector also grew by 35 per cent in the sanction of home loans in the period under review though this was seven per cent lower than last year's rise while disbursements registered a 34 per cent growth in the period under review.

Outlook for the sector in the next six months was positive as more than 35 per cent growth in both sanctions and disbursements was expected.

The construction industry recorded a 15 per cent growth in turnover and a 42.7 per cent rise in exports. The growth last year was 12 per cent. Despite a decline, projects in South East Asia were expected to rise by 15-20 per cent in the next six months.

Another sector that rallied forcefully after the Iraq war was the tourism industry with arrivals shooting up by 12 per cent. This was expected to go up to 15-20 per cent before the end of this fiscal. Similarly, hotel occupancy was also projected to increase by 15-20 per cent during the period. Last year, arrivals were up by 15 per cent.

The IT industry turnover in hardware was up by 16 per cent against last year's 12 per cent. Sale of personal computers and software recorded a growth of 12 and 20 per cent respectively.

The survey attributed success for such a healthy growth of the services sector to improved power generation. Thermal power grew by 6.4 per cent while hydro electric power recorded a negative growth of 6 per cent in production.

Also, the air cargo industry performed well as was reflected in the country's rising imports and exports. Exports of air cargo grew by 14 per cent in the first quarter against 6 per cent in the same quarter last fiscal. Imports were also up by 13 per cent and projection for the overall growth of the sector was over 5-10 per cent in the next six months.