Services Leave Much To Be Desired

New Delhi, September 25: | Updated: Sep 26 2002, 05:30am hrs
Double taxation, multiple regulations, lack of national standards and non-enforcement of service-level agreements are the major roadblocks for growth of the services sector, says the latest survey of the Confederation of Indian Industrys (CII) associated council (Ascon).

Improvement has seen in the air cargo transportation as the sector has reported over 6 per cent growth during the first quarter ended September compared to the negative growth in Q1 last fiscal. The sector is expected to grow by 5-10 per cent in the next six months, says the survey, and has cited high cost of airfreight, inadequate infrastructure including ground handling, warehousing and storage facilities at airports as the major problems affecting the sector.

As the survey has found that hotel and tourism industry still languishing in the negative growth category, it has called for harmonisation of expenditure, sales and luxury taxes in different states to boost growth.

Stating that the incentives provided in the budget has boosted the housing finance sector, the survey has stressed on the need to address the issues like absence of foreclosure laws and high stamp duties to get the desired growth rate. The sector is expected to grow by more than 30 per cent in the next six months.

The survey, however, has reported an improved situation in the services sector as a whole during July-September compared to the same period last fiscal. Of the 13 sectors surveyed this year, three sectors have reported excellent growth and one high growth rate. While four sectors have recorded moderate growth this year, it has said, adding the number of sectors in the negative area has also come down to five.

Excellent growth has been achieved by housing finance (34 per cent), cellular services (80) and software services (20) during the first quarter, says the survey.

The telecom sector, with rural telephony, is expected to grow by 65 per cent in the next six months. Uncertainty regarding issue of wireless in local loop-based mobility, cost and availability of spectrum, local regulatory issues are, however, some of the problems hampering the sector, says the survey.

It has identified retailing as a promising growth area with an expected 34 per cent growth.