Services

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Current Status

• It is the largest and fastest growing sector globally contributing to the global output and employing more people than any other sector
• Why has services sector grown?
  • Increase in Urbanisation, privatisation and more demand for intermediate and final consumer services
  • Availability of quality services is vital for the well being of the economy
• Service sector in India accounts for more than half of India’s GDP.
• Key service Industry in India: Health and Education
  • A robust healthcare system will help create a strong and diligent Human Capital who in turn can contribute productively to the nation’s Growth
• Marked increase in services sector growth in the post liberalisation period
• Account for 55.2 % share of GDP
• Grows annually by 10%
• Contributing to about a quarter of total EMPLOYMENT, high share of FDI inflows, over one third of total exports and recording a very fast growth of 27.4 pc through the first half of 2010-11.
• The ratcheting of the overall growth rate (CAGR) of the Indian economy from 5.7% in the 1990s to 8.6 pc during 2004-05 to 2009-10 was to a large measure due to the acceleration of CAGR in the services sector from 7.5 pc in the 1990s to 10.3 pc in 2004-05 to 2009-10.
• Services sector growth has been around 10 pc since 2005-06

Contribution of Services sector to Indian economy

• Share in GDP
  • 1950-51: 30.5 pc
  • 2009-10: 55.2 pc
  • If construction is included (RBI and WTO method): 63.4 pc
• CSO Classification
  • Trade, hotels and restaurants (16.3 of national GDP)
  • Transport, storage and Communication (7.8 of GDP)
  • Financing, insurance, real estate and business services (16.7)
  • Community, social and personal services (14.4)
• Services trade surplus: USD 54 bn (2008-09)
  • USD 35.7 bn (2009-10)
• China (10.5%) followed by India (8.9%) remain the two fastest growing economies in top 12 countries.
• Statewise
  • States such as Delhi, Chandigarh, Kerala, Maharashtra, Bihar, Tamil Nadu and West Bengal have Shares equal to or above all-India share of services in the GDP

FDI in Services

• 44 pc of FDI inflows between 2000 and 2009 were in the services sector (construction excluded)
  • Of this financial and non-financial companies have attracted the largest FDI
• Not all sectors are fully open for FDI. Reforms are needed.
• FDI in retail <do detailed>
  • FDI in single brand retail is permitted upto 51%. Now 100 pc.
  • FDI in multi-brand retail is being debated
  • Permitting FDI in retail in a phased manner beginning with the metros and incentivising existing retailer to modernise could help the interests of consumers as well as farmers
  • FDI in retail in bring in latest technology and Supply Chain Management in the country
  • The move for FDI in retail has been opposed on the ground that the move could result in widespread closure of small time shops.
  • The way out could be lay down strict rules of operation for foreign retail chains
    • Include requirement of local procurement
    • This will also lead to stabilising prices by cutting out the middlemen
  • FDI in insurance
    • There is a proposal to raise the FDI cap in the insurance sector from the current 26 pc to 49 pc.
    • A bill for this has been pending before the Parliament
    • Some new sectors in insurance should be opened up – like health insurance
    • This will enable India export super speciality hospital services and medical tourism
    • Withdraw FDI restrictions on foreign re-insurance companies. This will help India access the global re-insurance businesses
  • Banking
    • There is a scope for attracting large investments from abroad
    • Currently 74% Investment is allowed.
    • There is 10 pc limit on voting rights in respect of banking companies
    • FDI in banking should be seen in the context of overall financial stability
  • New Areas for FDI
    • Railways
      • Rakesh Mohan Committee on Infrastructure-2/”>INFRASTRUCTURE had recommended throwing up the entire railway sector open to private investment
      • The finance ministry paper (2010) suggested 26 FDI in railways which can help overcome the current drought in investment in the railways
    • Shipping
      • India’s shipping tonnage is inadequate, accounting for mere 1.17% of global registration
      • The share of India’s vessels in carriage of India’s overseas trade had dropped from 40% in late 1980s to about 9.5% in 2008-09
    • Accountancy, legal services, healthcare and education services

Way Forward

• Retain the country’s competitiveness in those services sectors where it has already distinguished such as IT and ITeS
• The next task is to make foray into some traditional Realms such as tourism and shipping where other nations have already established themselves.
• Make serious inroads into globally traded services in still Niche areas for India such as financial services, healthcare, education, accountancy, legal and other business services where the country possesses a huge domestic market but has also displayed signs of making a dent in the global market.
• This requires
  • Reciprocal movements on the part of India in opening up its own market, liberalising FDI not only to improve the infrastructure but also to absorb the best practices that are so universally acclaimed.
  • Set up strong institutional bodies in the form of regulatory agencies to take care of both domestic and international interests in case when market-distorting moves are made by either party.
• Non-Equity modes of engagement could be used to bypass the political difficulties in reforms

The Government of India has adopted a few initiatives in the recent past. Some of these are as follows:

• The Government of India plans to significantly liberalise its visa regime, including allowing multiple-entry tourist and business visas, which is expected to boost India’s services exports.
•  The Government of India announced plan to increase the number of common service centres or e-Seva centres to 250,000 from 150,000 currently to enable village level entrepreneurs to interact with national experts for guidance, besides serving as a e-services distribution point.
• The Central Government is considering a two-rate structure for the goods and service tax(GST), under which key services will be taxed at a lower rate compared to the standard rate, which will help to minimize the impact on consumers due to increase in service tax.
• The Government of India plans to take mobile Network to nearly 10 per cent of Indian villages that are still unconnected.
• The Government of India has proposed provide tax benefits for transactions made electronically through credit/debit cards, mobile wallets, net banking and other means, as part of broader strategy to reduce use of cash and thereby constrain the parallel economy operating outside legitimate financial system.
• The Reserve Bank of India (RBI) has allowed third-party white label automated teller machines (ATM) to accept international cards, including international prepaid cards, and has also allowed white label ATMs to tie up with any commercial bank for cash supply.

Money-supply-2/”>Money Supply is the entire stock of currency and other liquid instruments in a country’s economy as of a particular time. The money supply can include cash, coins and balances held in checking and Savings accounts.

Money Supply can be estimated as narrow or Broad Money.

There are four measures of money supply in India which are denoted by M₁, M₂, M₃ and M₄. This classification was introduced by the Reserve Bank of India (RBI) in April 1977. Prior to this till March 1968, the RBI published only one measure of the money supply, M or defined as currency and demand deposits with the public. This was in keeping with the traditional and Keynesian views of the narrow measure of the money supply.

M1 (Narrow Money) consists of:

(i) Currency with the public which includes notes and coins of all denominations in circulation excluding cash on hand with banks:

(ii) Demand deposits with commercial and Cooperative banks, excluding inter-bank deposits; and

(iii) ‘Other deposits’ with RBI which include current deposits of foreign central banks, financial institutions and quasi-financial institutions such as IDBI, IFCI, etc., other than of banks, IMF, IBRD, etc. The RBI characterizes as narrow money.

M₂. which consists of M₁ plus post office savings bank deposits. Since savings bank deposits of commercial and cooperative banks are included in the money supply, it is essential to include post office savings bank deposits. The majority of people in rural and urban India have preference for post office deposits from the safety viewpoint than bank deposits.

M₃. (Broad Money) which consists of M₁, plus time deposits with commercial and cooperative banks, excluding interbank time deposits. The RBI calls M₃ as broad money.

M₄.which consists of M₃ plus total post office deposits comprising time deposits and demand deposits as well. This is the broadest measure of money supply.

High powered money – The total liability of the monetary authority of the country, RBI, is called the monetary base or high powered money. It consists of currency ( notes and coins in circulation with the public and vault cash of Commercial Banks) and deposits held by the Government of India and commercial banks with RBI. If a memeber of the public produces a currency note to RBI the latter must pay her value equal to the figure printed on the note. Similarly, the deposits are also refundable by RBI on demand from deposit holders. These items are claims which the general public, government or banks have on RBI and are considered to be the liability of RBI.

RBI acquires assets against these liabilities. The process can be understood easily if we consider a simple stylised example. Suppose RBI purchases gold or dollars worth Rs. 5. It pays for thr gold or Foreign Exchange by issuing currency to the seller. The currency in circulation in the economy thus goes up by Rs. 5, an item that shows up on the liabilityside of RBI’s Balance sheet. The value of the acquired asset, also equal to Rs. 5, is entered under the appropriate head on the Assets side. Similarly, the RBI acquires debt Bonds or securities issued by the government and pays the government by issuing currency. It issues loans to commercial banks in a similar fashion.

1. Role of Commercial Banks
2. Issue of NPA
3. Financial Inclusion

[su_heading size=”21″]Role of Commercial Banks[/su_heading]

A Commercial bank is a type of financial institution that provides services such as accepting deposits, making business loans, and offering basic investment products

There is acute shortage of capital. People lack initiative and enterprise. Means of transport are undeveloped. Industry is depressed. The commercial banks help in overcoming these obstacles and promoting Economic Development. The role of a commercial bank in a developing country is discussed as under.

1. Mobilising Saving for Capital Formation:

The commercial banks help in mobilising savings through network of branch banking. People in developing countries have low incomes but the banks induce them to save by introducing variety of deposit schemes to suit the needs of individual depositors. They also mobilise idle savings of the few rich. By mobilising savings, the banks channelize them into productive investments. Thus they help in the capital formation of a developing country.

1. Financing Industry:

The commercial banks finance the Industrial Sector in a number of ways. They provide short-term, medium-term and long-term loans to industry.

1. Financing Trade:

The commercial banks help in financing both internal and external trade. The banks provide loans to retailers and wholesalers to stock goods in which they deal. They also help in the movement of goods from one place to another by providing all types of facilities such as discounting and accepting bills of exchange, providing overdraft facilities, issuing drafts, etc. Moreover, they finance both exports and imports of developing countries by providing foreign exchange facilities to importers and exporters of goods.

1. Financing Agriculture:

The commercial banks help the large agricultural sector in developing countries in a number of ways. They provide loans to traders in agricultural commodities. They open a network of branches in rural areas to provide agricultural credit. They provide finance directly to agriculturists for the Marketing of their produce, for the modernisation and mechanisation of their farms, for providing Irrigation facilities, for developing land, etc.

They also provide financial assistance for Animal Husbandry, Dairy farming, sheep breeding, Poultry farming, pisciculture and Horticulture-2/”>Horticulture. The small and marginal farmers and landless agricultural workers, artisans and petty shopkeepers in rural areas are provided financial assistance through the Regional Rural Banks in India. These regional rural banks operate under a commercial bank. Thus the commercial banks meet the credit requirements of all types of rural people. In India agricultural loans are kept in priority sector landing.

1. Financing Consumer Activities:

People in underdeveloped countries being poor and having low incomes do not possess sufficient financial Resources to buy durable consumer goods. The commercial banks advance loans to consumers for the purchase of such items as houses, scooters, fans, refrigerators, etc. In this way, they also help in raising the standard of living of the people in developing countries by providing loans for consumptive activities and also increase the demand in the economy.

1. Financing Employment Generating Activities:

The commercial banks finance employment generating activities in developing countries. They provide loans for the education of young person’s studying in engineering, medical and other vocational institutes of higher Learning. They advance loans to young entrepreneurs, medical and engineering graduates, and other technically trained persons in establishing their own business. Such loan facilities are being provided by a number of commercial banks in India. Thus the banks not only help inhuman capital formation but also in increasing entrepreneurial activities in developing countries.

1. Help in Monetary Policy:

The commercial banks help the economic development of a country by faithfully following the monetary policy of the central bank. In fact, the central bank depends upon the commercial banks for the success of its policy of monetary management in keeping with requirements of a developing economy.

 
[su_heading size=”21″]Issue of NPA[/su_heading]

A non performing asset (NPA) is a loan or advance for which the principal or interest payment remained overdue for a period of 90 days.According to RBI, terms loans on which interest or installment of principal remain overdue for a period of more than 90 days from the end of a particular quarter is called a Non-performing Asset.

However, in terms of Agriculture / Farm Loans; the NPA is defined as under:

• For short duration crop agriculture loans such as paddy, Jowar, Bajra etc. if the loan (installment / interest) is not paid for 2 crop seasons , it would be termed as a NPA.
• For Long Duration Crops, the above would be 1 Crop season from the due date.

The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act has provisions for the banks to take legal recourse to recover their dues. When a borrower makes any default in repayment and his account is classified as NPA; the secured creditor has to issue notice to the borrower giving him 60 days to pay his dues. If the dues are not paid, the bank can take possession of the assets and can also give it on lease or sell it; as per provisions of the SAFAESI Act.

Reselling of NPAs :- If a bad loan remains NPA for at least two years, the bank can also resale the same to the Asset Reconstruction Companies such as Asset Reconstruction Company (India) (ARCIL).  These sales are only on Cash Basis and the purchasing bank/ company would have to keep the accounts for at least 15 months before it sells to other bank. They purchase such loans on low amounts and try to recover as much as possible from the defaulters. Their revenue is difference between the purchased amount and recovered amount.
[su_heading size=”21″]Financial Inclusion[/su_heading]

Financial inclusion or inclusive financing is the delivery of financial services at affordable costs to sections of disadvantaged and low-income segments of Society, in contrast to financial exclusion where those services are not available or affordable.

Government of India has launched an innovative scheme of Jan Dhan Yojna for Financial Inclusion to provide the financial services to millions out of the regulated banking sector.

Various program’s for financial inclusion are:-

• Swabhimaan Scheme: under the Swabhimaan campaign, the Banks were advised to provide appropriate banking facilities to habitations having a population in excess of 2000 (as per 2001 census) by March 2012.
• Extention of  the banking network in unbanked areas,
• Expansion of Business Correspondent Agent (BCA) Network
• Direct Benefit Transfer (DBT) and Direct Benefit Transfer for LPG (DBTL)
• RuPay, a new card payment scheme has been conceived by NPCI to offer a domestic, open-loop, multilateral card payment system which will allow all Indian banks and financial Institutions in India to participate in electronic payments.
• Pradhan Mantri Jan-Dhan Yojana (PMJDY) was formally launched on 28th August, 2014. The Yojana envisages universal access to banking facilities with at least one basic banking account for every household, financial Literacy, access to credit, insurance and pension. The beneficiaries would get a RuPay Debit Card having inbuilt accident insurance cover of Rs.1.00 lakh. In addition there is a life insurance cover of Rs.30000/- to those people who opened their bank accounts for the first time between 15.08.2014 to 26.01.2015 and meet other eligibility conditions of the Yojana.

•  PUBLIC FINANCE

  Public finance is the study of the role of the government in the economy. It is the branch of economics which assesses the government revenue and government expenditure of the public authorities and the adjustment of one or the other to achieve desirable effects and avoid undesirable ones.

  It includes the study of :-

  • Fiscal Policy
  • Deficits and Deficit Financing
  • Fiscal Consolidation
  • Public Debt– Internal and External Debt

  Fiscal policy relates to raising and expenditure of money in quantitative and qualitative manner.Fiscal policy is the use of government spending and Taxation to influence the economy. Governments typically use fiscal policy to promote strong and sustainable growth and reduce POVERTY. The role and objectives of fiscal policy gained prominence during the recent global economic crisis, when governments stepped in to support financial systems, jump-start growth, and mitigate the impact of the crisis on vulnerable groups.

  Historically, the prominence of fiscal policy as a policy tool has waxed and waned. Before 1930, an approach of limited government, or laissez-faire, prevailed. With the stock market crash and the Great Depression, policymakers pushed for governments to play a more proactive role in the economy. More recently, countries had scaled back the size and function of government—with markets taking on an enhanced role in the allocation of goods and services—but when the global financial crisis threatened worldwide Recession, many countries returned to a more active fiscal policy.

  How does fiscal policy work?

  When policymakers seek to influence the economy, they have two main tools at their disposal—monetary policy and fiscal policy. Central banks indirectly target activity by influencing the money supply through adjustments to interest rates, bank reserve requirements, and the purchase and sale of Government Securities and foreign exchange. Governments influence the economy by changing the level and Types of Taxes, the extent and composition of spending, and the degree and form of borrowing.

  Deficit financing, practice in which a government spends more money than it receives as revenue, the difference being made up by borrowing or minting new funds.

  Fiscal consolidation is a term that is used to describe the creation of strategies that are aimed at minimizing deficits while also curtailing the accumulation of more debt. The term is most commonly employed when referring to efforts of a local or national government to lower the level of debt carried by the jurisdiction, but can also be applied to the efforts of businesses or even households to reduce debt while simultaneously limiting the generation of new debt obligations. From this perspective, the goal of fiscal consolidation in any setting is to improve financial stability by creating a more desirable financial position.

  The public debt is defined as how much a country owes to lenders outside of itself. These can include individuals, businesses and even other governments.public debt is the accumulation of annual budget deficits. It’s the result of years of government leaders spending more than they take in via tax revenues.

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Account Management

Account management is the process of overseeing and managing the accounts of customers or clients. This can include tasks such as creating and maintaining accounts, processing payments, and resolving issues.

Billing

Billing is the process of sending invoices to customers and collecting payments. This can be done manually or through automated systems.

Customer Support

Customer support is the process of providing assistance to customers with questions or problems. This can be done through phone, email, chat, or Social Media.

Data Protection

Data protection is the process of securing personal information from unauthorized access, use, disclosure, disruption, modification, or destruction. This can be done through a variety of methods, such as encryption, access controls, and data backups.

Dispute Resolution

Dispute resolution is the process of resolving disagreements between parties. This can be done through mediation, arbitration, or litigation.

Feedback

Feedback is information that is provided by customers or clients about their experience with a product or service. This information can be used to improve the product or service.

Fraud Prevention

Fraud prevention is the process of identifying and preventing fraudulent activity. This can be done through a variety of methods, such as monitoring transactions, using fraud detection Software, and requiring customers to provide identification.

Identity Verification

Identity verification is the process of confirming the identity of a person or entity. This can be done through a variety of methods, such as requiring customers to provide identification, using biometrics, or conducting background checks.

Payment Processing

Payment processing is the process of accepting and processing payments from customers. This can be done through a variety of methods, such as credit cards, debit cards, and PayPal.

Privacy Policy

A privacy policy is a document that outlines how a company collects, uses, and discloses personal information. This document should be easy to understand and should be available to customers before they provide any personal information.

Refunds

A refund is a return of money that has been paid for a product or service. This can be done for a variety of reasons, such as if the product is defective or if the customer is not satisfied with the service.

Shipping

Shipping is the process of transporting goods from one location to another. This can be done through a variety of methods, such as ground shipping, air shipping, and parcel delivery.

Terms of Service

Terms of service are a set of rules that govern the use of a product or service. These terms should be clear and easy to understand, and they should be available to customers before they use the product or service.

Troubleshooting

Troubleshooting is the process of identifying and resolving problems. This can be done through a variety of methods, such as checking for errors, using online resources, and contacting customer support.

User Agreement

A user agreement is a contract between a company and a user. This agreement outlines the rights and responsibilities of both parties. It is important to read and understand the user agreement before using a product or service.

These are just some of the services that companies offer to their customers. By providing these services, companies can improve the customer experience and increase customer satisfaction.

Here are some frequently asked questions and short answers about the following topics:

• Artificial Intelligence (AI) is a branch of computer science that deals with the creation of intelligent agents, which are systems that can reason, learn, and act autonomously. AI research has been highly successful in developing effective techniques for solving a wide range of problems, from game playing to medical diagnosis. However, there are still many challenges to be overcome before AI can achieve human-level intelligence.
• Blockchain is a distributed Database that allows for secure, transparent, and tamper-proof transactions. It is the underlying technology behind Bitcoin and other cryptocurrencies. Blockchain has the potential to revolutionize a wide range of industries, including finance, healthcare, and supply chain management.
• Cloud computing is the on-demand delivery of IT resources over the Internet with pay-as-you-go pricing. Instead of buying, owning, and maintaining physical data centers and servers, you can access technology services, such as computing power, storage, and databases, on an as-needed basis from a cloud provider like Amazon Web Services (AWS).
• Cybersecurity is the practice of protecting critical systems and sensitive information from digital attacks. It encompasses a wide range of security measures, from firewalls and intrusion detection systems to data encryption and identity management. Cybersecurity is essential for businesses of all sizes, as well as governments and other organizations.
• Data science is the field of study that combines domain expertise, programming skills, and knowledge of mathematics and statistics to extract meaningful insights from data. Data scientists use a variety of techniques, including machine learning, data mining, and statistical analysis, to solve complex problems.
• Machine learning is a field of computer science that gives computers the ability to learn without being explicitly programmed. Machine learning algorithms are used to train computers to perform tasks such as image recognition, natural language processing, and fraud detection.
• Natural language processing (NLP) is a field of computer science that deals with the interaction between computers and human (natural) languages. NLP tasks include machine translation, text summarization, and question answering.
• Robotics is the field of engineering that deals with the design, construction, operation, and application of robots. Robots are machines that can be programmed to perform a variety of tasks, from simple manufacturing operations to complex surgery.
• The Internet of Things (IoT) is a network of physical objects that are embedded with sensors, software, and other technologies for the purpose of connecting and exchanging data with other devices and systems over the Internet. The IoT has the potential to revolutionize a wide range of industries, including manufacturing, healthcare, and transportation.
• Virtual reality (VR) is a computer-generated simulation that can be similar to or completely different from the real world. VR places the user inside an experience that allows them to interact with 3D objects and environments. VR is often used for gaming, entertainment, and training.
• Augmented reality (AR) is a technology that superimposes a computer-generated image on a user’s view of the real world, thus providing a composite view. AR is often used for gaming, navigation, and education.

I hope this helps!

Sure. Here are some multiple choice questions without mentioning the topic “Services”:

1. What is the name of the programming language that is used to create websites and web applications?
   (A) Python
   (B) Java
   (C) C++
   (D) JavaScript

2. What is the name of the operating system that is used on most personal computers?
   (A) Windows
   (B) macOS
   (C) Linux
   (D) Android

3. What is the name of the search engine that is used by most people to find information on the internet?
   (A) Google
   (B) Bing
   (C) Yahoo!
   (D) DuckDuckGo

4. What is the name of the social media platform that is used by most people to connect with friends and family?
   (A) Facebook
   (B) Twitter
   (C) Instagram
   (D) Snapchat

5. What is the name of the video-sharing website that is used by most people to watch and share Videos?
   (A) YouTube
   (B) Vimeo
   (C) Dailymotion
   (D) Twitch

6. What is the name of the email service that is used by most people to send and receive emails?
   (A) Gmail
   (B) Outlook
   (C) Yahoo! Mail
   (D) iCloud Mail

7. What is the name of the cloud storage service that is used by most people to store files online?
   (A) Google Drive
   (B) iCloud Drive
   (C) Dropbox
   (D) OneDrive

8. What is the name of the photo editing software that is used by most people to edit photos?
   (A) Adobe Photoshop
   (B) GIMP
   (C) Paint.NET
   (D) PhotoScape

9. What is the name of the video editing software that is used by most people to edit videos?
   (A) Adobe Premiere Pro
   (B) Final Cut Pro
   (C) DaVinci Resolve
   (D) Lightworks

10. What is the name of the word processing software that is used by most people to create documents?
    (A) Microsoft Word
    (B) LibreOffice Writer
    (C) Google Docs
    (D) Apple Pages

I hope these questions were helpful!