10.2 ndian onom
employment, need of skilled and unskilled labour
IntroductIon force, formality anf informality of the sector, etc.
India’s services sector has not only outperformed For this, the idea of ‘Make in India’ has acclaimed
other sectors of the Indian economy, but has also timely action from the government. Again,
played an important role in India’s integration the importance of expanding the Railways and
with world trade and capital markets. India’s enhancing public investment in it have also been
liberalisation of services has been a challenging pointed out.2 These findings are also in line with
process in several sub-sectors, but clearly those several other studies of the recent times.3
services where integration through trade and
FDI has gone further are also the ones that have IndIa and Global ServIceS
exhibited more rapid growth along with positive
Services sector have been hit hard after the
spillovers on the rest of the economy.
Great Recession among the western developed
There is, however, a concern1 about the economies. Rather during 2017 there was a
sustainability of a services-led growth process strong signal of recovery reported from this part
which largely stems from exports of skill-based of the world which had a positive impact on the
services. The prevailing view is that for services services-oriented countries. Latest features about
growth to be sustained, the sector cannot remain the services sector at global and India levels are as
dependent on external demand. It must also be given below:
driven by internal demand. More broad-based
As per the latest data4, India’s ranking
growth within the services is also required to
improved from 14th position in 2006 to
ensure balanced, equitable and employment-
7th position in 2016, among the world’s
oriented growth, with backward and forward
15 largest economies in terms of overall
linkages to the rest of the economy. In this regard
GDP. Among these top 15 economies,
further infrastructural and regulatory reforms and
China (9.8 pp) recorded the highest
FDI liberalisation in services can help diversify the
increase in services share to Gross Value
sources of growth withing India’s services sector
and provide the required momentum. Added (GVA) during 2006-16, followed
by India (7.1 pp) and Spain (7.0 pp).
In recent years, there has been a debate in
the country regarding the selection of the sector In 2016, services GVA growth rate (at
which can lead the growth process in the country. constant prices), was highest in India at
This debate originated from the fact that the 7.8 per cent followed by China at 7.4 per
services sector contributed over 62 per cent in cent. As per the ILO’s estimates, among
the GDP during the decade 2001–12. But the the top 15 economies, the services sector
debate has been somewhat solved by the newly accounted for more than two thirds of
published Economic Survey 2014–15 in favour total employment in 2016 in most of
of the manufacturing sector. The Survey has gone them except India and China, with India’s
to quote several empirical studies of recent times 2. For a detailed description See Ministry of Finance,
linking both services and manufacturing sectors Economic Survey 2014–15, Vol. 1. Though, the theme
to a great many real issues—potential to create of the analysis has been included in this book itself, in
the Chapter-9 ‘Industry and Infrastructure’.
1. Rupa Chanda, in Kaushik Basu and Annemie Maertens 3. India Development Report 2015, Oxford University
(eds) ‘Services-led Growth’ The New Oxford Press, N. Delhi, 2015..
Companion to Economics in India, Vol. II (New 4. National Accounts Statistics, UNO, New York, USA,
Delhi: Oxford University Press, 2012), pp. 624–32. 2017.