Indian Economy News

The services sector grew at 8.4% on a year-over-year basis in FY22

The service sector witnessed a swift rebound in FY22 of 8.4% as compared to a contraction of 7.8% recorded in the previous financial year. The Union Minister for Finance and Corporate Affairs, Ms. Nirmala Sitharaman mentioned that the swift rebound was driven by the growth in the contact-intensive services sub-sector which registered a sequential growth of 16%.

As per the First Advance Estimates, gross value added (GVA) in the service sector is estimated to grow at 9.1% in FY23 driven by 13.7% growth in contact intensive service sector. The survey highlighted the growth in the Purchasing Manager's Index (PMI) services to 58.5% in December 2022 which was followed by overall retail inflation which led to a retreat in the price pressures of inputs as well as of raw materials.

The bank credit to service sector recorded a growth of 21.3% in November 2022 which was the second highest in the last 46 months. Within the sector, the credit to wholesale had increased by 10.2% whereas the retail trade had increased by 21.9% in November 2022. Apart from this, credit to non-banking financial companies (NBFCs) had grown by 32.9%. The services exports registered a growth of 27.7% during April-December 2022 as compared to 20.4% in the corresponding period last year.

The World Investment Report 2022 of the United Nations Conference on Trade and Development (UNCTAD) placed India as the seventh largest recipient of foreign direct investment (FDI) in the top 20 host countries. India received the highest-ever inflows of US$ 84.8 billion which included US$ 7.1 billion FDI equity inflows in the services sector in FY 2022. The IT-BPM revenues registered a growth of 15.5% during FY22, the IT sector constituted a majority share of 51% whereas the exports showed a growth of 17.2%.

India’s e-commerce market is projected to grow at a rate of 18% annually by 2025. India was also ranked 10th out of the top 46 countries in the world in the Medical Tourism Index FY21 as released by Medical Tourism Association.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.