The tempo of services-led growth of the Indian economy can be maintained only if the Government adopts a targeted approach to big ticket services, such as medical tourism, shipping and logistics, among others.
This apart, removing restrictions on foreign investment in legal and accountancy services could result in growth, the >Economic Survey 2012-13 said. “Removing or easing domestic regulations can lead to dynamic gains for the Indian economy,” it said.
The Survey also recommended that foreign direct investment limits in the insurance sector and public sector banks needed to be reviewed and increased to improve the growth prospects of these sectors.
Raising insurance FDI cap
“By raising (FDI) cap to 49 per cent in the insurance sector, there is scope for substantial growth in the coming years. Competition and adoption of best practices could strengthen this sector, reduce the premium and expand the services to the vast untapped rural India,” it said.
On legal services, the Survey said, “Foreign service providers can neither be appointed as partners nor sign legal documents and represent clients. The Bar Council is opposed to entry of foreign lawyers/law firms in any manner.”
Indian advocates are not permitted to enter into profit-sharing arrangements with persons other than Indian advocates, it added.
The Survey expressed concern that education services, which was under the concurrent list, was bogged down by multiple controls and regulations by Central, State Governments and statutory bodies.
It said growth in India’s services exports would continue to take a hit as the global economic situation remains “less conducive”.
Services exports at $142.3 billion showed a lower growth of 14.2 per cent in 2011-12 against 29.8 per cent in the preceding year.
The services sector includes trade, hotels, transport, storage, communication, financing, insurance, realty and business services.