Impact of Service Sectors on Indian Economy

Dr.C.Muthuraja, M.A, M.Phil, PhDDean, Curriculum Development & Research & Head, Research Department of Economics

The American College, Madurai - 625 002, TAMIL NADU & Secretary, Madurai Productivity Council(cmuthuraja@gmail.com) - (M-09486373765)

Presented at State Level Seminar on ‘Impact of Service Sectors on Indian Economy’ organized by Department of Economics and Centre for Research, Ayya Nadar Janaki Ammal College, Sivakasi held on 11th Feb, 2016

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INTRODUCTION / IMPORTANCE Service sectors - Lifeline for the socio-economic

growth of a country The reason for the growth of the service sector is

due to the increase in urbanization, privatization and more demand for intermediate and final consumer services

After 1991, service sector experienced a sudden boom

In India the growth in the primary and secondary sectors are directly dependent on the growth of service sectors

A major contributor of national income and employment

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Background Sectors of Indian economy

Primary Sector: Economic activity depends mainly on exploitation of

natural resources then that activity comes under the primary sector. Agriculture and agriculture related activities are the primary sectors of economy

Secondary Sector: Main activity involves manufacturing then it is the

secondary sector. All industrial production where physical goods are produced come under the secondary sector

Tertiary Sector: The activity involves providing intangible goods like

services then this is part of the tertiary sector. Financial services, management consultancy, telephony and IT are good examples of service sector

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Service Sectors

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Covers a wide range of activities Services provided by the most sophisticated sectors like

telecommunications, satellite mapping, and computer software

Simple services like those performed by the barber, the carpenter, and the plumber

Highly capital-intensive activities like civil aviation and shipping

Employment-oriented activities like tourism, real estate, and housing

Infrastructure-related activities like railways, roadways, and ports

Social sector- related activities like health and education + + +

Service sectors mainly includes ! Trade Hotels and restaurants Transport including tourist assistance activities as well as

activities of travel agencies and tour operators Storage and communication Banking and insurance Real estate and ownership of dwellings Business services: accounting; software development; data

processing services; business and management consultancy; architectural, engineering and other technical consultancy; advertisement and other business services

Public administration and defence Other services including education, medical and health,

religious and other community services, legal services, recreation and entertainment services

Personal care services SINCE 1881

Share & Growth of India’s Services Sector

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Performance in Services: International Comparison

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Performance of India’s Services Sector

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Impact of Service sectors on Indian Economy Economic Growth GDP / National Income Economic Stabilization Employment Generation Export Promotion / Import Substitution Earning more Foreign Exchange Price Control / Stabilization Enhancing Productivity Help to Develop other Sectors Quality of Economic Services Increasing Tax Resources + + +

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Contribution of Service Sectors in Employment

Labor market outcomes are critical to economic policy evaluation

Growth of jobs, earnings, job quality in terms of worker status like regular work or casual or self employment and the access to social security benefits tell us much about the wellbeing of workforce in an economy

India’s experience appeared to be different with the share of services sector in GDP sharply going up after 1990s

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Sector-wise Employment Trends

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Government Initiatives Provides several incentives in wide variety of sectors The Government of India has adopted a few initiatives.

Some of these are : 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

help to minimize the impact on consumers due to increase in service tax

Plans to take mobile network to nearly 10 per cent of Indian villages that are still unconnected

Proposed provide tax benefits for transactions made electronically through credit/debit cards, mobile wallets, net banking and other means

RBI has allowed third-party white label automated teller machines (ATM) to accept international cards

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Road Ahead ! ? Services sector growth is governed by both domestic and

global factors Some improvement in global growth and recovery in

industrial growth will drive the services sector to grow 7.4 per cent in FY2016 (FY15: 7.3 per cent)

The performance of trade, hotels and restaurants, and transport, storage and communication sectors are expected to improve in FY2016

The financing, insurance, real estate, and business services sectors are also expected to continue their good run in FY2016

The growth performance of the community, social and personal services sector is directly linked with government expenditure and we believe that the government will remain committed to fiscal consolidation in FY2016

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Reaching the Unreached?ROLE OF

INTERNATIONAL INSTITUTIONS GOVENMENTS PRIVATE CORPORATES NON GOVERNMENT ORGANISATIONS PUBLIC INDIVIDUAL / STUDENTS & SCHOLARS

APPEALECONOMICS EDUCATION / LITERACY FOR ALL

PLEASEEACH ONE TEACH ONE

IF NOTEACH ONE CATCH ONE AND TEACH ONE

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