A new report on India’s services sector

Planning Commission has released a detailed report on the Services sector in India.

The Group selected six sub-sectors of the Services Sector viz. IT & IT enabled Services, Tourism, Shipping, Health Services, Financial Services and Retail Trading Services for detailed examination. While the needs of each sub-sector are unique in many respects, the Group felt that action on three fronts was critical for enhancing the competitiveness of the services sector. The education system must be reformed and expanded, the skill deficit in almost all service sectors must be eliminated through concerted action and the physical infrastructure including the urban infrastructure and civic amenities brought to world standards. A copy of the Report is enclosed.

A much needed report on the sector which contributes majority of India’s output but we know very little about.

You notice one thing- this report has hardly been covered in the media. Unlike the Rajan report or MIFC report on financial sector, the services sector report seems to have been completely ignored.

This is what I keep saying – we hardly care for reforms in the real sector but are extremely focused on financial sector. Finance can only work if we get activity in the real sector. But somehow we just don’t seem to care.

Financial deepening without financial excesses

Mr Hervé Hannoun, Deputy General Manager of the Bank for International Settlements gives good speeches. I covered his previous speech on how Asian economies are managing their capital flows here and in a research paper here.

In his recent speechhe raises the burning issue – how to deepen financial markets without creating financial excesses. He suggests the need for Central bankers to adopt a macro-prudential framework to understand risks in the financial system. Read the speech for details.

Assorted Links

1. PSD Blog points to comments over rising food prices. Simon Johnson also has some comments. EPSA Blog points to some developments on this issue as well

2. ID Blog has some interesting posts: first of its kind microfinance deal, concerns in microfinance

3. WSJ Blog points to a discussion what drives growth- exports. This discussion was actually held at a meeting to discuss findings of Growth Commission. The Commission is chaired by Michael Spence.

4. Fin Prof pointsto a paper on how financially constrained people spend their money

5. Rodrik on governance

6. JRV says Mahathirism is back

7. Ajay Shah on exchange rate regimes. I am expecting some good debate on this topic – whether exchange rate appreication lowers inflation or not?