Page 1 of 9
European Journal of Business &
Social Sciences
Available at https://ejbss.org/
ISSN: 2235-767X
Volume 07 Issue 01
January 2019
Available online: https://ejbss.org/ P a g e | 150
Service Sector of India: A Key of Development
Rahul Kumar
Department of Economics M. D. University, Rohtak
Email: - rahuleco10@gmail.com
M. 9671551577
ABSTRACT
The Indian economy has grown at a strong pace in recent years, and the salient characteristics of
this growth have been the backbone of the services sector. The configuration of the economy can
be seen by comparing its share among the three major sectors: primary, secondary and tertiary in
the total production of country. Although agriculture is the most important sector in the
developing economy, but with per capita incomes, agriculture is losing its place to allow for the
expansion of the industrial sector and subsequently in the services sector. The services sector
produces "intangible" goods. Some are recognized and by now exist for example Government,
education, health, and information technology. The services sector is currently the leading and
greatest growing sector in India and has the uppermost labor efficiency, but employment has not
kept up with the sector's share of GDP and has not resulted in the number or quality of business
needed. The main focus of this document is to demonstrate the importance of the service sector
in the growth of the country and the various policies adopted by the government to make the
sector more useful for people's welfare.
Keywords: Services, Growth, Issues Etc.
INTRODUCTION:
In developing nations, such as the service sector in India, it can lead to comprehensive growth all
the way through backward and forward linkages, by guaranteeing equal admittance to essential
Page 2 of 9
European Journal of Business &
Social Sciences
Available at https://ejbss.org/
ISSN: 2235-767X
Volume 07 Issue 01
January 2019
Available online: https://ejbss.org/ P a g e | 151
services at small prices, job creation and the development of human capital. It remains the main
driver of economic growth in India, resulting in 66.1 per cent of overall added value growth in
the 2015-2016 periods, significant foreign net income and the most attractive segment of FDI
flows. Several services are closely related to production or manufacturing. In the past, some of
these services were implemented within the company in manufacturing facilities. A variety of
factors, including technological advances, pressures to reduce global competitive costs, volatility
of market demand, etc., have led to a reorganization of production, so that producer services that
contribute directly to Manufacturing capacity are now independent of the manufacturing process.
Consequently, services to the producer are services and are located in this service sector.But the
service sector has many obstacles on the path of growth. Govt. is trying to make polices for the
progress of the sector that has shown a positive result.
OBJECTIVES:
To give an overview of Indian service sector
How service sector is important for development?
Service sector Growth: causes and hurdles
RESEARCH METHODOLOGY
The whole study is based on secondary resources such as various books, newspapers articles,
magazines and Webpages. The researchers here are trying to give a short review of India’s
service sector.
SERVICE SECTOR IN INDIA
In provisions of shares in national and state income, trade flows, foreign direct investment flows
and employment the service sector in India remained the mainly vibrant sector. The Indian
services sector covers a wide range of activities such as trade, hotels, restaurants, transport,
storage, communications, finance, insurance, real estate, business services, community, social
and personal services and construction services. As a third sector, the services sector plays an
Page 3 of 9
European Journal of Business &
Social Sciences
Available at https://ejbss.org/
ISSN: 2235-767X
Volume 07 Issue 01
January 2019
Available online: https://ejbss.org/ P a g e | 152
significant role in the country's GDP. Growth associated with service sector development has the
potential to alter a developing nation into a advanced country. Over the past two decades, India
has emerged as an information technology strong gratitude to the service industry.Before going
into the detail of the discussion further let‘s understand the difference between service and a
product. Both are vulnerable to dynamic technology and shifting economic behavior. Broadly
speaking, service and product can be distinguished on the basis of their physical characteristics
like tangibility, perish ability, time of usage or consumption. The view points of classical
economists (Smith, Ricardo, Malthus, Mills) classify service as activity performed by
unproductive labor i.e. servants of wealthy individuals, military, lawyers, doctors, authors,
musicians etc. Even Marx did not give due weightage to the services and as a consequence, the
national accounting systems of the communist nations were mum to include service in their
national output. Modern economic theories account for productive nature of services which is
driven by utility and demand. According to these economists service is anything which is result
of labor and does not produce a tangible commodity (Griliches). Service must be consumed as
they are produced (Hill).This definition of service is challenged in the present times which is
influenced by the IT revolution. Now with the advent of technology, software program,
animations, music albums, video, movies and digitalized contents of literature and creative
works are not only stored but transferred easily in no time. The production, storage, transfer,
distribution and delivery (at minimum cost & time) of these offerings fall into the category of
services.
CLASSIFICATION OF THE SERVICE SECTOR
India has a quasi-federal governance structure and, according to the Indian Constitution, some
services are under the Union List, others fall under State Governments (List of States) and the
rest of these fall in the category of state government joint administration(concurrent list)
Service Sector consists of
(a) Trade
(b) Hotels and restaurants
