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.