Action Plan for 'Champion Services'

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:

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