Service sector and economic, growth
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The document discusses the growth of the service sector in India and its importance to the economy. It notes that the service sector now dominates India's economy, accounting for over half of GDP. Services are becoming a larger source of employment than manufacturing or agriculture. The sector is expected to generate about 70% of new jobs in the coming years. Growth has been driven by both increasing domestic and foreign demand for services as well as reforms and trade liberalization. The conclusion states that further improving service quality and speed will be important for India's continued economic development.
Service sector and economic, growth
- 1. Service Sector and Economic, Growth Definition of service sector The tertiary sector of the economy (also known as the service sector or the service industry) is one of the three economic sectors, the others being the secondary sector(approximately the same as manufacturing) and the primary sector (agriculture, fishing, and extraction such as mining). The portion of the economy that produces intangible goods. According to the U.S. Census Bureau, the service sector primarily consists of truck transportation, messenger services and warehousing; information sector services; securities, commodities and other financial investment services; rental and leasing services; professional, scientific and technical services; administrative and support services; waste management and remediation; health care and social assistance; and arts, entertainment and recreation services. Individuals employed in this sector produce services rather than products. Examples of service sector jobs include housekeeping, psychotherapy, tax preparation, guided tours, nursing and teaching. By contrast, individuals employed in the industrial/manufacturing sector might produce goods such as cars, clothing and toys.
- 2. Service Sector and Economic, Growth Service Sector and Economic, Growth Services includes the five sub-sectors on trade, hotels and restaurant; transport, storage and communications; finance, insurance, real estate and business services; public administration and defence; and the other services part of the community, social and personal services (consisting largely of personal services). The remaining sectors are all included in Manufacturing +, i.e., this sector also includes mining apart from the utilities and construction sectors. In terms of sectoral composition, the services sector always dominated the manufacturing sector in India. It overtook the dominant agriculture + sector in the mid-eighties when it attained the level of 38 per cent of the aggregate output. The manufacturing + sector too overtook the agricultural sector in the mid-nineties by producing around 28 per cent of the domestic product. The services sector is clearly attaining the dominant position that was once reserved for the agricultural sector. Growth seems to have by-passed the manufacturing sector in India.
- 3. Service Sector and Economic, Growth The contribution of services to development The service sector is an important component of any country‟s economy. It makes a direct and significant contribution to GDP and job creation, and provides crucial inputs for the rest of the economy, thus having a significant effect on the overall investment climate, which is an essential determinant of growth and development. Some service sectors such as the health, education, water and sanitation sectors, are also directly relevant to achieving social development objectives. The service sector accounts for a significant proportion of GDP in most countries, including low income countries, where it frequently generates over 50% of GDP. The process of development usually coincides with a growing role of services in the economy (alongside a reduced role for agriculture). Thus services constitute an increasing percentage of GDP in nearly all developing countries.
- 4. Service Sector and Economic, Growth The service sector is becoming increasingly important in the economies of developed and developing countries. This is not unique to South Africa. While some countries have recognised the importance of strategies to further stimulate the productivity and growth of the service sector, other countries have not yet recognised that the service sector is constrained by a variety of challenges that are unique to this sector. In fact, many countries hope that services will go away. This sector is already a large contributor to jobs and Gross Domestic Product worldwide. Services are different from goods and require different strategies for development than the primary and secondary sectors which have been traditionally given attention. Although not everybody agrees on how to classify services, it is generally agreed that services are becoming very important in economic development. In some cases manufacturing will not become more productive without more specialised services. For the manufacturing sector, the service sector, especially knowledge-intensive and business services, is being increasingly recognised as important levers for growth and development of the economy. Knowledge intensive service providers are not only carriers of specialised knowledge; they are also connectors, technology transfer agents and problem solvers.
- 5. Service Sector and Economic, Growth
- 6. • Telecommunication • Hospitality industry/Tourism • Mass media • Healthcare/hospitals • Public health • Information technology • Wholesale and Trade • Transportation • Education • Government services • Financial services – Banking – Insurance – Investment management • FMCG • Professional services – Accountancy – Legal services – Management consulting • Consulting • Retail sales • Real estate SERVICE INDUSTRY Service Sector and Economic, Growth
- 7. Service Sector and Economic, Growth Services sector in future providing about 70 per cent of the new job opportunities in the economy New employment possibilities in the services sector are construction, trade, transport, storage, financial services, communication and personal services Employment in manufacturing would also expand, but its contribution to the total increase in employment would only be around 17 per cent. India is among the top 15 countries with highest overall GDP in 2011, India ranked 9th in overall GDP and 10th in services GDP. Service sector has a share of 57 per cent in the gross domestic product (GDP) in 2011- 2012. Services sector has been increased by 9.1 per cent
- 8. • The three groups of services are : • Group I - Traditional services – retail and wholesale trade, transport and storage, public administration and defense – which tend to be slow growing in the sense that their share in GDP has fallen in more advanced countries. • Group II is a hybrid of traditional and modern services consumed mainly by households – education, health and social work, hotels and restaurants, and other community, social and personal services – whose share in GDP has risen in step with per capita income. • Group III is made up of modern services – financial intermediation, computer services, business services, communications, and legal and technical services. • Productivity growth has been highest in Group III. WHERE IS SERVICE-SECTOR GROWTH CONCENTRATED?
- 9. REASONS FOR GROWTH OF SERVICE SECTOR •Both demand and supply factors have led to the growth of service sector. •On the demand side, the high growth of services output was mostly attributed to factors such as increasing input usage of services by other sectors, mainly manufacturing sector (i.e. higher domestic demand); higher foreign demand due to trade demand); liberalization; and high income elasticity for services. •On the supply side, the increased trade in services following trade liberalization policies and other reforms in 1990s induced this growth. •Economic affluence •Changing role of women •Cultural changes •Conservation of natural resources •Development of markets •Increased consciousness of health care.
- 10. Finally to conclude that, the service sector is very important for India, as it is contributing half of the GDP growth in the Indian economy. Employment is increasing due to development of service sector. There is a very good scope to improve further in the services provided by the companies and government. As India is developing very fastly there is a need for change in the quality and also the speediness of the services CONCLUSION