Measures to improve Indian Economy by Service Sector

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Growth of service sector in India is a unique example of leap - frogging traditional models of economic growth. Since independence, the contribution of service sector in India to the country's GDP is a lion's share of over 60%. Since it employs only 25% of the labor, agriculture and manufacturing has not yet risen to its full potential.

 





The service sector in India becoming the mainstay of not only for growth in GDP but also a  key vehicle for employment generation. This sector is of soft parts of the economy such as activities where people offer their knowledge and time to improve performance, productivity, potential and sustainability. India's service sector has been the powerhouse of the country's economic growth.  



 


          

Services contribute massively to India's integration with world markets through trade and FDI flows. Growth has been rapid in Software, Business, Communications and Financial services among others. The service sector activities can be grouped into  -


                 


1. Trade, hotel and restaurants.

2. Financial institutions, insurance, real estate and business services.

3.Transport, Storage and Communications Transport includes roads, railways,         Airways ( Inland and Overseas), Water transport. 

4. Community, Social and Personal services such as Health, Education, NGO s            etc.

India stands one of the leading economy because its growth has been led by Service sector. It is a larger part of the Indian economy both in terms of employment potential and its contribution to national income. Demand and supply factors have led to this growth. On the demand side high growth of services in the economy was mostly due to the factors such as the increasing input usage of services by other sectors. On the supply side is the increased trade in services following trade in liberalization policies and other reforms of 1990s induced this growth. 

Trade liberalization is responsible for the development of finance, transport, communications, and other service sector activity including in service hotel and restaurant. Along with this the increase in demand for health and education also led to expansion of service sector. Service sector activities are able to generate new employment opportunities in the economy.

At present India is facing numerous socio- economic problems due to lack of economic opportunities. By expanding service sector activities, the socio- economic problems can be solved. There is a scope in expanding the demand for service sector by the burgeoning middle class, through which employment and income can be generated for poor people of India. 

Service sector can contribute to the redressing of balance of payment problem. The increase in export of services can earn more foreign exchange and reduce the balance of payment deficit. 


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