Economic Survey puts its money on tourism

NEW DELHI: Emphasizing the importance of services in boosting GDP growth, the Economic Survey has sought strengthening of traditional heavyweights like software and telecom, while laying greater focus on new areas like tourism, shipping and logistics.
The survey has also sought removal or easing of "domestic regulations" to unshackle potential in services which contribute nearly 60% to the country's GDP."The immediate challenge for the services sector covering myriad activities and areas is growth revival. India’s growth has been basically a services-led growth pulling up overall growth of the economy," the survey said.
It said a "more-targeted approach" focusing on big-ticket services could lead to exponential gains for the economy. "While software and telecom services have led by example, there are some other important services like tourism, including medical tourism, and shipping and logistics. Tourism is a big-ticket item which can not only lead to higher growth but also more inclusive growth," it said.
The survey said there is an urgent need to address issues like high luxury taxes on hotels by states and ensure greater cleanliness and safety for tourists which can help in giving a big boost to the tourism sector. "Refunding VAT as done in countries like Thailand and Singapore can also help the tourism sector with ripple effects on sectors like textiles and leather manufacturing, as it can lead to high purchase of these items in which India is price competitive."
The survey said that the compounded annual growth rate (CAGR) of the services sector GDP was 10% for the period 2004-05 to 2011-12, though it has slowed down since. "The slowdown in the rate of growth of services in 2011-12, and particularly in 2012-13, from the double-digit growth of the previous six years, contributed significantly to slowdown in the overall growth of the economy."
Budget 2013 > Rail Budget 2013 > Economic Survey 2013