Service sector in Indian scenario

Service sector plays an important role in shaping social as well as economic growth of a country. In global world, service sector has emerged as the largest and fastest growing sector. In global production and employment generation also it has a greater share, its growth in agriculture sector has always been high compared to any other sector. In Indian economy also service sector is the largest employment generating sector and its contribution in the growth of the economy cannot be ignored. For the last 10 years the share of service sector in the GDP has always been more than 50% in India. In economical survey of 2013-2014 also, the service sector has emerged as the fastest growing sector in comparison to any other sector. In terms of growth, from 2001-2012 service sector was the second largest sector. During these days growth was 9% where as in China it was 10.9%. India is giving tough competition to China in this sector.

 

Global Position

According to GDP growth in 2012, of top 15 countries India was at 12^th position. In global scenario the contribution of service sector in GDP growth rate was 65.9% and in employment it was 44%, means out of 100 employments 44 were in service sector. In terms of this in Indian GDP, the contribution of service sector was 56.9% where as in employment generating it was only 28.1%. In the year 2013 GDP, the contribution of services was 57%. In business, hotel & restaurant, transportation, storage and broadcasting the rate has reduced to 3% where as in finance, insurance, real estate increase in rate to 12.9% was observed.

Lack of FDI in service sector

In financial year 2013-2014, a fall in FDI by 37.6% can be observed to 6.4 billion dollar in spite of rise in FDI by 6.1 % totally. In global service sector in the year 1990 India’s contribution was 0.6% which has increased to 3.3% at present financial year 2013-2014. In service sector in India information technology (IT) has the highest contribution of 46% but in the financial year 2013-2014 it has reduced by 5.4% to 40.6%. Travel & tourism’s contribution was 12% but a fall of 0.4% can be seen at present financial year.

Huge potential of service sector in India

According to the economical survey in India at present, the share of service sector is higher than agriculture and corporate sector and it is more than 50% of the GDP and it is the second fastest growing sector. Service sector is the most stable sector at present compared to any other sector. The rise in the sector is observed because of the increase in social, IT and financial services. In some areas rise in service sector is observed by the increase in use of mobile phone services.

At present the economy of India is dependent on service sector. India has ignored the common growth model and refused to accept the manufacturing sector moving towards services from agriculture sector, where as China has shifted from agriculture to manufacturing sector. In service sector agriculture and corporate industry will also get help by creating employment, as manufacturing industry has not been able to generate enough employment according to its potential. By increasing population day by day in India the number of dependent individual in lower and middle class family is also increasing. In this case investment should be made for economical growth of the country. At present the expenditure is more than income. In domestic life people save money but it is not growing and thus it is not able to provide social as well as individual profit. In education and health sector huge amount of investment is needed especially among women so that awareness on birth control can be spread. The coming two decade would be very challenging for India to provide employment to the youth. In this case service sector has to play a major role in generating employment, for deploying this India is in good position as there is huge English speaking population which can help the global financial and corporate industry. Service sector can influence poverty to a large extend. In agriculture sector the influence of growth on poverty has not showed his color largely thus in order to eradicate poverty it is very important to align agriculture with service sector and create an organized market environment, at the same time encouraging the youth and generating enough employment in the sector is also needed and this can be achieved by mutual understanding and co-operation. By mutual co-operation employment can be generated in hotel and restaurant industry, getting IT industry in rural areas life of rural people can be changed. In many states the awareness of television and mobile technology has helped to eradicate poverty.

Along with this improvement should be made in credit policy structure also, so that current account deficit can be reduced and economical growth can be speed up. In economical survey figures the picture of service sector is very impressive as the share of service sector is increasing continuously but in terms of employment it has not yet shown any positive sign which is a matter of concern. Government has to think about it. The global economic condition has also affected India but we cannot deny the fact that our economical policies are also equally responsible for decline in growth rate. In telecom and other sector government policies has affected the growth of the country, if the condition in these sector would have been better then the service sector would have been much strong and through this more employment could have been generated. According to economical figures, government has to soon start effective economical policies in order to improve the economy of the country. We hope that new government will take effective steps to improve the economy of the country and at the same time take strict action against government expenditure.