New Delhi: The growth of India's services sector, which was highly resilient even during the global financial crisis, has moderated to 7.7 percent in 2016-17, according to the Economic Survey.
The sector, which grew by 9.7 percent in the previous year, however, remains the key driver of India's economic growth, contributing almost 62 percent of its gross value added growth in 2016-17.
Policies like GST and FDI liberalization coupled with initiatives for promoting digitalization, tourism and shipping have brightened the growth prospects for this sector, the mid-year survey which was tabled in Parliament on Friday said.
"India's services sector growth, which was highly resilient even during the global financial crisis, has been showing moderation in recent times," it said.
The growth of this sector has moderated to 7.7 percent in 2016-17 compared to 9.7 percent achieved in the previous year, it added.
The survey said the slowdown in the sector was mainly due to a deceleration in growth in two services categories - trade, hotels, transport, communication and services related to broadcasting (7.8 percent), and financial, real estate and professional services (5.7 percent).
However, pick up is seen in recent months with some segments of the sector showing better performance, it said.
"In 2016-17, services exports recorded a positive growth of 5.7 percent with pick up in some major sectors like transportation, business services and financial services; and good growth in travel," the survey said.
However, software services exports, accounting for around 45.2 percent of total services, declined though marginally by 0.7 percent, it added.
The survey said some services continued to be key drivers of India's economic growth and highlighted reasonably good performance in telecom with "increase in telecom connections reflecting the Jio effect" and aviation particularly domestic travel among them.
Besides, tourism related services also chipped in particularly in terms of foreign exchange earnings along with information technology-business process management (IT-BPM) despite fall in growth in computer software.
Citing the latest World Trade Organization (WTO) data for 2016, the survey said services export growth is in negative territory for many economies, though for India it is positive at 3.6 percent and higher than the 0.4 percent global services export growth.
In the US, the sector growth decelerated to 1.9 percent in 2016 from 2.8 percent in 2015 mainly due to the slowdown in sectors like real estate, professional and business services.
Likewise, China also witnessed slight deceleration in the growth rate of the services sector to 7.8 percent in 2016 from 8.3 percent in 2015.
