Servicing the service sector
What we need to consider now at the state level is how to revive the once thriving service sector as ravaged by the pandemic.
We have talked about some of the positive impacts of the pandemic Covid 19, but not of the negative fallout of these positive impacts. For example, public spending has greatly decreased due to restrictions in gathering of religious or social functions, while it has affected the service sector related to such functions. Gone are the days, when community participation or support was an integral part of religious functions and when the concerned families are not left alone to fend for themselves. Yet, the service sector surrounding these functions have grown in leaps and bounds in recent times with event management groups, mandap services and catering industries coming into the scene. Now, all that has gone with the wind as a result of the restrictions compelled by the pandemic. The service sector has been a key driver of both the global and Indian economy over the last three decades. The economic reforms since the early Nineties unleashed the potential of the services sector by utilising available skilled manpower due to state-supported higher education.
India is probably the only big economy that didn’t follow linear growth theories by jumping from a predominantly agricultural economy to a services-led growth economy without much improvement in manufacturing. As a result, India’s growth story has been driven by services, which has a 55 percent share in the economy. India is fast becoming a major quality service provider. Even before the COVID pandemic set in and just before the nationwide lockdown was announced at the end of March, the sector was booming.
The Centre rolled out a whopping Rs 20.9 lakh crore stimulus package to pull the economy out from the ravages of the pandemic. The package had a strong focus on the MSME sector, employee provident fund, power distribution companies and taxation, among other affected areas. Most of the stimulus package is in the form of funding and loan opportunities and, injecting liquidity to the market. While the package is a beam of hope for some, it has overlooked the plight of the services sector. The sector finds little mention or attention in the government’s Atmanirbhar Reform Package. The sector’s significance in the economy continues to grow with its share amounting to two-thirds of total FDI inflows into India and about 38 per cent of total exports. As the post-pandemic world is taking shape, the sector is struggling hard to keep its head above water. An immunity-building exercise through capital infusion and appropriate relaxation in relevant sectors will help the economy to survive the pandemic. Most of the services sectors are the worst affected and unfortunately, we don’t see any specific fiscal and monetary stimulus for them. In fact, some sectors would find it difficult to survive if the pandemic continues.
What we need to consider now at the state level is how to revive the once thriving service sector as ravaged by the pandemic. One has to consider the contribution it has made in the employment sector and state entrepreneurs linked with the sector while framing policies. Although, the state is basically an agriculture based economy, one needs to focus on providing stimulus to the service sector in the interest of the vast numbers of unemployed youth, as the state is lacking in terms of mineral resources. Our basic resource is the skilled and educated youth, and we should be concentrating our energy on tapping the latent energy present in our youth population.