Slowdown hits services sector

India’s trade surplus in services has been contracting, mainly due to a sharp drop in non-software services exports, which, according to economists, shows that the global economic slowdown is finally beginning to affect India’s services sector.

In addition, though the overall trade deficit has been decreasing due to low commodity prices, India’s trade deficit with China is worsening which is a worrying trend.

The main reason for this, the Nomura paper says, is the sharp decline in services exports, from 8.2 per cent of GDP in February 2014 to 7.4 per cent in February 2016.

“Although a drop in software services exports was a driver of the decline, receipts from transportation (sea and air), financial services and other business services (consulting and technical/trade-related) were also much lower, and together these non-software categories comprised 73 per cent of the moderation in services exports between Q4 2013 and Q4 2015,” according to the paper.

A research paper by Crisil found that India’s trade deficit with China has been worsening at an alarming rate.

On the other hand, India’s imports from China have not been affected to any large degree,

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Source:Thehindu