What is Services Sector?
Historical Background
Key Points
8 points- 1.
Largest contributor to India's GDP, typically accounting for over 50% of the national output.
- 2.
Comprises diverse sub-sectors including IT & ITES (Information Technology Enabled Services), financial services, trade, hotels, transport, communication, public administration, defence, and other services.
- 3.
A major driver of economic growth, employment generation (especially skilled employment), and foreign exchange earnings through exports.
- 4.
Highly diverse, ranging from high-skill, capital-intensive services (e.g., IT, finance) to low-skill, labor-intensive services (e.g., retail, hospitality).
- 5.
Contributes significantly to India's balance of payments through services exports, particularly in IT and business process outsourcing.
- 6.
Its growth is often interlinked with the performance of the primary (agriculture) and secondary (manufacturing) sectors, providing crucial support services.
- 7.
Vulnerable to global economic slowdowns, geopolitical events, and domestic policy changes affecting demand and investment.
- 8.
Plays a crucial role in urban development and the formalization of the economy.
Visual Insights
Recent Developments
5 developmentsPost-COVID-19 recovery saw robust growth, particularly in contact-intensive services.
Digitalization and e-commerce continue to drive growth in specific sub-sectors like logistics and online services.
Government initiatives such as 'Make in India' and 'Digital India' indirectly support the services sector by boosting demand for related services.
Global economic uncertainties and geopolitical tensions can impact services exports and foreign investment.
Focus on formalization, skill development, and improving ease of doing business to enhance the sector's potential.