The services sector, apart from being a dominant sector in India’s GDP, also attracts substantial foreign investment flow. The sector covers trade, health care, education, hotel and restaurants, transport, telecommunication, transportation, information technology, banking and finance, insurance, real estate, business services, and real estate. The sector contributed nearly 57% of India’s Gross Value Added (GVA) at current prices in the first half of FY 2018-19. The Indian government is also taking various initiatives to promote growth in this sector.
According to government data on higher education, 141 universities, 14 IITs, seven IIMs, seven IITs and one NIT have been opened in the last four years. Under the ‘Revitalising Infrastructure and Systems in Education’ (RISE) scheme, Higher Education Financing Agency (HEFA) will provide `1,00,000 crore in the next four years. On the other hand, to enrich the education system qualitatively, from 2021, a Ph.D degree will be a must for teaching at university level for the entry-level designation of Assistant Professor. In February, 2018 the Cabinet also approved the implementation of the Prime Minister’s Research Fellowship (PMRF) scheme that will provide `1,650 crore for a period of seven years to 1000 B. Tech. students. Last year, the budget for quality education was increased under the Rashtriya Uchhatar Shiksha Abhiyan (RUSA). The Global Initiative for Academic Network (GIAN) was also started aiming at internationalisation of education. Under this programme, 700 professors from 58 countries have so far conducted 1,117 courses in India.
The real estate segment has long suffered from malpractices. The implementation of the Goods and Services Tax (GST) and the Real Estate Regulatory Act (RERA) 2016 initially seemed burdensome as the sector faced temporary problems. But the RERA has provided a much needed sense of security to consumers of the real estate market. The Government of India and the state governments have taken several initiatives to boost the sector. One of the most talked about projects is the Smart City Project- an ambitious plan of building 100 smart cities in India.
In February, 2018, the central government approved the National Urban Housing Fund with an expenditure of Rs. 60,000 crore. Under the Pradhan Mantri Awas Yojana (PMAY-Urban), 1,427,486 houses have been sanctioned during 2017-18. Within mid-2018, construction of an additional 3,21,567 affordable houses was also sanctioned under the scheme.
The Securities and Exchange Board of India (SEBI) has given its approval for the Real Estate Investment Trust (REIT) platform that will help the sector to attract huge investments from diverse players from different segments.
India is the leading outsourcing destination across the world, accounting for 55% of the global market share approximately. In money terms, it accounted for around Rs. 18500 crore ($185 billion) of global services sourcing business in FY 2017-18. Indian Information Technology (IT) and Information Technology Enabled Services (ITeS) companies set up over 1,000 global delivery centres in about 80 countries across the world, contributing to a growth of Rs. 16700 crore ($167 billion) in FY 2017-18.
The government has identified IT as one of 12 most important service sectors. The government has set up a Rs. 5,000-crore fund for realising the potential of these 12 service sectors. The NITI Aayog has set up a national level programme that will enable efforts in Artificial Intelligent (AI) and in leveraging AI technology for developmental works.
As the banking sector in India is suffering from a large number of bad loans and non-performing assets (NPAs), the RBI is trying to strengthen its rules and regulation to recover the assets. The government is planning to inject Rs. 42,000 crore in public sector banks by the end of March, 2019.
Till September, 2018, the government has launched the India Post Payments Bank (IPPB) scheme and has opened branches across 650 districts to achieve the objective of financial inclusion. The government has also initiated the Pradhan Mantri Jan Dhan Yojana (PMJDY) scheme, and included additional incentives.