Page 45 - DMGT522_SERVICES MANAGEMENT

Services Management

Notes 2010-11, at a CAGR of 9.4 per cent. As per the CSO’s QE, the growth rate in 2010-11 was 9.1 per
cent. The share of trade in GDP has been slightly above 15 per cent in the last six years (15.4 per
cent in 2010-11). With a high GDP growth in the last five years, and high growth in consuming
population, the retail business is of late being hailed as one of the sunrise sectors in the economy.
A. T. Kearney, an international management consultancy firm, has identified India as one of the
topmost retail destinations. Since 2006, India has been allowing FDI in single brand retail to the
extent of 51 per cent. In January 2012, the government removed restrictions on FDI in the single
brand retail sector, allowing 100 per cent FDI.

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Caution Trade is an important activity providing interface between the producer and
consumer.
Allowing FDI in multi-brand retail is one of the major issues in this sector. This could begin in
a phased manner in the metros, with the cap at a lower level coupled with incentivizing the
existing ‘mom and pop’ stores (kirana shops) to modernize and compete effectively with the
retail shops, foreign or domestic. While agricultural marketing could improve immensely
with the growth of modern retail trade, the revenue to the government could also increase, as
at present the retail sector is largely unorganized and has low tax compliance. The Inter-
Ministerial Group (IMG) on Inflation of the Government of India has also recommended
leveraging FDI in multi-brand retail as one of the means for addressing issues relating to high
rates of food inflation and low prices realised by Indian farmers, developing a ‘farm-to-fork’
retail supply system, and addressing the investment gaps in post harvest infrastructure for
agricultural produce.

2.5.2 Tourism, including Hotels and Restaurants

Tourism is not only a growth engine but also an export growth engine and employment generator.
The sector has capacity to create large-scale employment both direct and indirect, for diverse
sections in society, from the most specialised to unskilled workforce. It provides 6-7 per cent of
the world’s total jobs directly and millions more indirectly through the multiplier effect as per
the UN’s World Tourism Organisation. Since tourism does not fall under a single heading in
India’s National Accounts Statistics, its contribution has to be estimated. Its contribution to GDP
and employment in 2007-08 was 5.92 and 9.24 per cent respectively as per Tourist Satellite
Account Data.
In India, the tourism sector has witnessed significant growth in recent years. During the period
2006 to 2011, the CAGRs of Foreign Tourist Arrivals (FTA) and Foreign Exchange Earnings (FEE)
from tourism (in rupee terms) were 7.2 per cent and 14.7 per cent respectively. FTAs in India
during 2010 were 5.78 million compared to 5.17 million during 2009, posting a growth of 11.8
per cent, much higher than the growth of 6.5 per cent for the world in 2010. FEEs from tourism
in rupee terms during 2010 were ` 64,889 crore compared to ` 54,960 crore during 2009 with a
growth rate of 18.1 per cent. Despite the slowdown and recessionary trends in the economies of
Europe and America, FTAs during 2011 were 6.29 million with a growth of 8.9 per cent over 2010
and FEEs in 2011 were ` 77,591 crore with a growth of 19.6 per cent. In the case of outbound
tourism, the number of Indian nationals’ departures from India during 2010 was 12.99 million
with a growth of 17.4 per cent for the year. Domestic tourism has also emerged as an important
contributor to the sector providing much needed resilience. Domestic tourist visits during 2010
are estimated at 740.2 million, with a growth of 10.7 per cent. Hotels and restaurants is an
important component of the tourism sector. As on 31 December 2011, there were 2,895 classified
hotels having a capacity of 1,29,606 rooms in the country. Availability of good quality and
affordable hotel rooms plays an important role in boosting the growth of tourism in the country.

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