As per a latest Livemint report, India’s service sector exports have registered unprecedented growth. It must be noted that the services sector plays a dominant role in the Indian economy, accounting for more than 50 per cent of the gross domestic product (GDP). While the export of merchandise has gone down in the ongoing financial year, export in services has picked up really well. As per official data from the commerce ministry, while India’s merchandise exports have contracted by 0.37 per cent in the April-July period from the same time a year ago, export of services have expanded by 8.65 per cent to $74.05 billion in the same period.
If the export of petroleum and gems and jewellery is excluded, then merchandise exports stand only slightly above service sector exports, at $79.81 billion. In totality, India’s exports have grown by 2.25% to $26.33 billion in the first four months of the ongoing Financial Year, powered by the impressive growth in the services sector exports which has clearly succeeded in managing the contraction in the merchandise exports. Imports have also gone down by 10.43% to $39.76 billion. And, therefore, the trade deficit has come down to $13.43 billion in the said time period. The trade deficit stood at $18.63 billion in the month of July last year. In fact, India is the only major Asian economy whose share of exports have actually risen amid the US-China trade war which has had global implications.
The excellent performance of India’s services sector is characterised by other factors also. There have been fewer job losses in the services sector as compared to those among manufacturers. Similarly, fewer service firms and that too in select services industries are getting dragged into bankruptcy tribunals than those engaged in the manufacturing sector. As per rating agency, CARE Ratings Ltd. companies in finance, retail, information technology, insurance and realty have enjoyed above average annual growth rate in job creation in 2019 while agriculture, crude oil, mining, iron and steel, telecom and hospitality have failed in this aspect and have witnessed a contraction in jobs. CARE Ratings’ analysis of 960 company annual reports has shown that the trend of job creation has varied across sectors, with the services sector performing better than other sectors.
The Insolvency and Bankruptcy Board of India (IBBI) data also corroborates the better performance of the services sector. According to this data, the manufacturing sector accounted for 46 per cent of the companies that ended up in bankruptcy tribunals since the new Bankruptcy Resolution came into force in 2016. The Services Sector has performed far better in this aspect too, accounting for only 15 per cent of the cases that have ended up in bankruptcy tribunals.