Growth of Services Sector in India

Abstract Services sector is the lifeline for the socio-economic growth of a country. It is today the largest and fastest growing sector globally contributing more to the global output and employing more people than any other sector. In alignment with global trend, the Indian Services sector has witnessed a major boom and is one of the major contributors to both employment and national income in recent time. Services sector in India today accounts for more than half of India’s GDP.  Since independence, there has been a marked acceleration in Services sector growth in India. This paper provides an overview of the Indian Services sector. It shows that this sector is the fastest growing sector in India, contributing significantly to GDP and GDP growth rate. However, there are some concerns. Economic growth has slowed down. Growth in employment in services has not been commensurate with the share of the sector in GDP. This paper estimates the contribution and growth of Services sector and its components to Gross Domestic Product (GDP) for the period of 60 years (1950-51 to 2010-11). The results showed that the contribution of Services sector and its components in total GDP has been increased phenomenally as compare to Primary and Secondary sectors during the study period. As India is travelling a novel path in economic growth by making services as the engine of growth, and bypassing industry, careful strategy are needed for consolidating, strengthening and furthering the growth. Further the study advocated that the growth of Services sector must be in tandem with Primary and Secondary sector for the comprehensive economic development of the economy.