ROLE OF SERVICE SECTOR IN INDIA'S ECONOMIC GROWTH

Rohan Thakur Sanjay Singh Shwetang Peshin Sundeep Singh Vinnu Bhardwaj

Introduction
The service industry forms the backbone of social and

economic development of a country. Emerged as the largest and fastest-growing sectors in the world economy. Shown a growth rate higher than that of agriculture and manufacturing sectors. It covers a wide range of services, such as trading, transportation, communication, financial, real estate and business services.

Service Sector in India

The services sector, as a whole, contributed as much as

68.6 percent of the overall average GROWTH in GDP between the years 2002 and 2007 The SHARE of services in Indias GDP increased from 33.5% in 1950s to 55.1% in 2010 and to 56.3% in 2011. Trade, hotels, and restaurants as a group is the largest contributor to GDP with a 16.9 % share followed by financing, insurance, real estate and business services. For the last 15 years, it has been pushing up the growth of the economy with a great amount of stability.

State-wise Comparison
Chandigarh with an 86 % share of services in the gross

state domestic product (GSDP) and Delhi with 81.8 % top the list . Chhattisgarh (34.8 %) and Himachal Pradesh (39.6 %). The highest growth rates of the services sector Arunachal Pradesh (34.9 %) and Sikkim (30.1 %).

Performances of some major services:

Trade
The value of trade in Indias GDP has grown from 433,967

crore in 2004 to 742,621 crore in 2010. The growth rate in India in 2010-11 was 9.1 %. The share of trade in GDP has been slightly above 15 % in the last six years.

Transport
Though India has one of the largest merchant shipping

fleets among developing countries, it is ranked eighteenth in the world in terms of DWT(Dead Weight Tonnage) with a share of only 1.09 %. In comparison, China ranked 9th with a share of 3.78%.

Transport cont..
The total capacity of Indian ports has reached

approximately 1,160 million tons as on 1 January2012. During 2009-10 and 2010-11, traffic at major ports attained a growth of 5.67 %. Madras Port and the Jawaharlal Nehru Port Trust (JNPT) were ranked 55th and 56th in the world 2009 in terms of total cargo volume.

Storage Services
Integral part of both inbound and outbound logistics.

In India, the most important component of warehousing is

agricultural storage for agro-produce, food grains, fertilizers, manure, etc. Other components include industrial warehousing for industrial goods, import cargo, and excisable cargo; inland container depots etc. The Central Warehousing Corporation (CWC) along with 17 State Warehousing Corporations (SWCs) provides scientific storage facilities for agricultural produce.

Cont..
As on 31December 2011, CVC was operating 469

warehouses, with total storage capacity of 99.81 lakh Metric Tons and average utilization of 89 %. Major policy initiatives taken recently by the government include construction of godowns under the seven-year/10year guarantee scheme of the Government of India; permission of up to 100 percent FDI in the construction of warehousing infrastructure.

Telecom
Third largest in the world and the second largest among

the emerging economies of Asia India is today one of the largest telecom markets in the world, with 18 million subscribers joining every month Contributes to nearly 2% of the Indian GDP Major transformation through significant policy reforms, particularly under NTP 1999 Today India has the world's second-largest mobile phone users with over 903 million as of January 2012

Contd..
This growth has been built on wireless revolution.

The industry is expected to reach a size of US$

68.81 billion by 2012 at a growth rate of over 26% Generate employment opportunities for about 10 million people during the same period.

Trends in the Industry

Rise in Cloud Computing

One Nation, One License Policy

Digitization of Cable TV Smart devices and Digital content

Challenges
The first challenge is to not only maintain the present

growth tempo in the service sector but also to accelerate it . Shipping is another major service , At present Indian ships cater to only 9 % of India's overseas trade Huge investment and modernization are needed in this sector to capture at least a substantial portion of Indias present, if not potential, trade.

Challenges
Financial services, health care, and education have huge

Opportunities which can be tailor-made to serve the objective of more inclusive development. The second challenge is to make business and financial services more stable and less vulnerable to external shocks The tourism sector which is an industry in itself is another mine of opportunity for India. While there has been a lot of hype about the potential of this sector, efforts are needed to make it a reality.

Conclusion
Service Sector is second only to agriculture in terms of employment

both in the national economy and in the majority of states.

The services sector is a net foreign exchange earner with exports of

some services growing exponentially.

It is also the major FDI-attracting sector with the five services topping

the list of sectors attracting FDI to the country

Conclusion
Even during the tumultuous years of the global economic crisis

maintaining a steady growth of around 10 %. This happened even when overall GDP growth dipped sharply to 6.7 % in 2008-9. Moving forward in 2011-12, though there is slight moderation in services growth to 9.4 %
Growth in trade, hotels & restaurants, transport, storage and

communication is more robust at 11.2 %

Conclusion
While software service exports have continued to be steady, the

unfolding events in the euro area could lead to some sluggishness in this sector.
While travel and tourism could also be affected when the pockets of

euro zone tourists are affected, it could also lead to a shift in tourist inflow pattern with increased inflow of holiday backpackers searching for cheaper destinations like India. Rise in tourists from South Asia, East Asia, and South East Asia could further help this sector.