Impact - Service Sectors - Indian Economy

1. Impact of Service Sectors on
Indian Economy
Dr.C.Muthuraja, M.A, M.Phil, PhD
Dean, 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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2. 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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3. 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 sectorSINCE 1881

4. 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
♦ + + +

5. 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
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6. Share & Growth of India’s Services Sector
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7. Performance in Services: International Comparison
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8. Performance of India’s Services Sector
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9. 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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10. 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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11. Sector-wise Employment Trends
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12. 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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13. 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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14. Reaching the Unreached?
ROLE OF
♦ INTERNATIONAL INSTITUTIONS
♦ GOVENMENTS
♦ PRIVATE CORPORATES
♦ NON GOVERNMENT ORGANISATIONS
♦ PUBLIC
♦ INDIVIDUAL / STUDENTS & SCHOLARS
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