Relax FDI in insurance, banking: Survey

Relax FDI in insurance, banking: Survey:

"The Economic Survey 2009-10 today made out a strong case for liberalising foreign direct investment policies for health insurance, rural banking and higher education, stating FDI can boost trade in services." "In the case of services sector, a more conducive environment can be created by liberalising FDI in services like health insurance, rural banking and higher education as FDI inflows and trade in services have a close relationship," the Survey said.
"Well thought out policy measures would give a boost to the services sector," it said.Expediting auction of high speed third generation telecom technology, removing 10-year disinvestment clause on FDI in insurance and liberalising the foreign investment in the animation sector are the key suggestions of the document, tabled in Parliament by the government a day before the Union Budget.It also called for encouraging venture capital in services and exemption of external commercial borrowings from the withholding tax for financing export-related activities and overseas acquisitions.The Survey said that with pick up in export of software and increase in foreign tourist arrivals, the country's services exports are expected to grow in the current fiscal, even as it contracted in April-September 2009-10.With improvement in exports of software and transportation and increase in foreign exchange earnings from tourism, the Survey said, "Services exports are expected to grow in 2009-10, though at a relatively slower pace."
Software exports, including those from BPO services have shown a recovery after a negative growth in the first half of 2009-10.
However, the expansion in software services would be tepid at 5 per cent in 2009-10.
The impact of the global recession was visible on India's services exports as they contracted by 21.4 per cent in the first half of 2009-10 compared to high growth of 27.6 per cent in the year ago period.
India's services exports reached $102 billion in 2008-09, a growth of 12.5 per cent over the previous year.
Similarly, with increase in global and India's trade, transportation exports, which were impacted in the first half of the year, are also expected to pick up, the Survey said.
Receipts under business and professional services are also expected to be higher, the Survey said. Also foreign tourists arrivals increased 21 per cent in December 2009 over the same month last year.
"Given the trend, travel receipts are also expected to improve in the remaining period of the year," it said.