Nodal agencies planned to monitor decision-making
In order to take a coordinated policy approach to effectively tap the full potential of the services sector, the government is considering setting up a separate nodal department on services under the ambit of the finance ministry. Another agency called National Commission for Services (NCS) may also come into existence.
While the nodal department will comprehensively monitor the services sector, NCS will be established on the lines of the National Manufacturing Competitiveness Council and National Farmers Commission.
?Lack of a single nodal department/dividion/institution is the biggest lacunae in the services sector, particularly for domestic policymaking,? states a finance ministry working paper, prepared by senior advisor to the ministry HAC Prasad.
?This (nodal department on services and NCS) is long overdue with more than three-fifth of the GDP being accounted by services in India,? he added. The report suggests a central department on services would help frame adequate policies that would take into account the domestic diversities in the sector as well as global aspects including the WTO negotiations.
It may also help the country negotiate legislations like the Data Protection Act of the European Union which prohibits India from accessing over 50% of the offshore market of the EU. The share of services in the national income, or gross domestic product (GDP), has gone up from 37.6% in 1993, to 54.9% in 2006-07. Besides, if the construction services are included in this figure, as done by the Reserve Bank of India, the services sector?s share in GDP would cross 61%.
This means India was inching closer to developed rich nations like the US, where the share of services in GDP is 73%. Services exports recorded a growth of 32.5% growth in the year 2006-07, with India exporting services worth $81.3 billion.
The study said while attempts are being made to remove the constraints in the manufacturing and agriculture sectors, ?there was no need to expect the hare (services) to sleep for the tortoise to overtake it.?
But what was hampering the formulation of a proper strategy for the services sector, even in WTO negotiations, was the lack of qualitative data. The existing data suffers from deficiencies related to definition, method of collection, suitability for pricing and construction of indices, the study pointed out.