Why in news?
The Union Cabinet has recently approved a Rs 50 billion fund to promote 12 “Champion Services”.
What is the proposal?
- An action plan for 12 champion services sector was identified by the Ministry of Commerce and Industry.
- A Rs 5,000-crore fund is proposed to be established to activate the plan for realising the full potential of the sector.
- The funds will be used to create services-specific plans.
- The sectors identified for special focus are:
- IT and IT enabled services (ITeS)
- tourism and hospitality
- medical value travel
- transport and logistics
- accounting and finance
- audio visual
- legal
- communication
- construction and related engineering
- environment
- financial
- education
- Ministries responsible for these sectors have to come up with the implementation timelines and a monitoring mechanism.
- This is done under the overall guidance of the Committee of Secretaries (CoS) under the Cabinet Secretary.
What are the objectives?
- Growth - Services sector now accounts for over half of India’s gross domestic product (GDP).
- The move is expected to promote this further.
- Through these focus sector, the government also targets raising the gross value added (GVA).
- Services sector share in GVA is envisioned to be increased from about 53% in 2015-16 to 60% by 2022.
- Exports - The share of India’s services sector in global services exports was 3.3% in 2015 as against 3.1% in 2014.
- The present proposal envisages a goal of 4.2 % to be achieved by 2022.
- Increased productivity and competitiveness of the champion service sectors will further boost exports.
- Jobs - Consequently, it is also expected to create more jobs.
What is the significance?
- The decision reflects a recognition of the critical role of the services sector.
- Manufacturing has not delivered the kind of employment potential that the government had hoped for.
- A dynamic services sector, on the other hand, holds out far greater promise in this respect.
What are the concerns?
- The issue of the foundations on which to build a strong services sector is uncertain.
- Services, by definition, are people-intensive.
- But the present scenario is that basic functions are increasingly automated.
- Naturally, job opportunities will only lie higher up in the value chain of the knowledge economy.
What should be done?
- Opportunities from the kind of relatively sophisticated services have to be maximised.
- It demands a far higher standard of basic social infrastructure than India has at present.
- Education - India urgently needs to improve the all-round standard of education.
- This is essential to provide for the knowledge workers to support India’s IT and ITeS expansion.
- Setting aside the IITs and IIMs, the delivery of most vocational and professional education lies in the private sector domain.
- However, the quality standards of these are widely varying.
- Spending funds on creating an “IIT/IIM” education model for these “champion services” could be a good start.
- Enabling environment - Merely creating superior knowledge workers will be a zero-sum game if the enabling environment remains constrictive.
- India’s long experience with brain drain stands as a proof for this.
- Regulations - The whole exercise should also involve streamlining rules and regulations.
- Increasing protectionism and regulations that restrict foreign investments should be given a relook.
- Championing services demands a hard look at such micro-issues too.
- Besides, the Champion Services programme would do well to build on this experience for other sectors of the economy too.
Source: Economic Times, Business Standard