India's Services Sector: Comprehensive Evaluation of Its Contribution to GDP, Employment and Trade

Abstract

This paper suggests that the services sector has played an important role in accelerating the growth rate of an Indian economy in the post-reform period. In India, services have been the fastest growing sector over the past few decades; there has been phenomenal increase in the services sector contribution to GDP, GDP growth rate, employment and trade. Within the services sector the growth has not been uniform, though Over the years, the contribution of financial and communication services to employment and GDP has increased, but their share in employment is very low as compared to share in India's GDP. The fastest growing services are those that are not generating sufficient growth in employment opportunities for the masses. Following economic liberalization, trade in services in India has expanded rapidly resulting in a favorable services trade balance. There has been a compositional shift in the structure of India's services exports away from traditional services such as travel and transport in 1980 towards other services such as computer and information, other business services and financial services post liberalization. India has a comparative advantage in export of computer and information services and other business services. Though there has been commendable growth in the trade in computer and business services but their employment generating capacity is not adequate to accommodate the workers displaced by the agriculture.