Services

Services sector has exhibited
resilience to fluctuations in
economic activity in recent
years. This is also evident in
continued strong growth of
FDI in the services sector,13
despite slowdown in overall
economic activities in the
country. At present, while
sentiments regarding
performance of commodity
producing sector are bleak,
indicators of services sector
present a mixed scenario.
While, some sectors such as
wholesale & retail trade and
transportation & communication are likely to show a weaker performance relative
to the preceding year, community & social services, finance & insurance as well
as public administration & defence are estimated to exhibit a strong growth for yet
another year.
Key indicators of wholesale & retail trade indicate a clear fall in trading activities
during the first quarter of FY09 mainly due to a significant decline in
manufacturing activities and relative softening demand for imported consumer
goods (see Figure 2.16).14 A slowdown in the latter also reflects the impact of
substantial depreciation of rupee, as well as a substitution effect as people
prioritize their consumption of essential goods given high inflation and
unfavorable environment for employment creation in the economy. Anecdotal
evidence also suggests a relative moderation in Eid-shopping during FY09
compared with the preceding year. A part of this moderation is due to above
mentioned economic factors and partially it was a result of disturbed law & order
situation in some parts of the country during Ramadan and afterwards.