2. Services
A type of economic activity that is intangible, is not stored and
does not result in ownership. A service is consumed at the point
of sale. Services are one of the two key components
of economics, the other being goods.
4. GDP
Gross domestic product (GDP) refers to the market value of all
final goods and services produced within a country in a given
period.
GDP per capita is often considered an indicator of a
country's standard of living.
5. Contribution of Various Sectors towards
GDP
Source: Databook, Planning Commission, Government of India (July 3 2014
6. • 59 per cent share in gross domestic product (GDP) in 2013-
2014
• Growth by 9 per cent annually (2013-2014)
• Contributing to about a quarter of total employment (26.8%)
• Accounting for a high share in foreign direct investment (FDI)
inflows and over one-third of total exports
• 7th largest service exporter in the world
[Source: indiabudget.nic.in]
Service Sector in India
8. Comparative Growth of Various Sectors
Growth rates of modern sectors like manufacturing, Financial, real estate,
professional services, etc. is increasing remarkable and traditional sectors tend to
decline.
9. Services Classification in Indian
Economy
• Trade, Hotels and Restaurants
• Transport storage and Communication
• Finance, Insurance, Real Estate and Business
Services
• Community, Social and Personal Services
• Construction
11. Share and Growth of India’s Service Sector
at Factor Cost
• CAGR @ 6.8% (2013-14) has declined due to
deceleration in the growth rate of Trade, Hotels and
Restaurants and Transport, Storage and
Communications
• Finance, Insurance, Real Estate and Business
Services has shown a robust growth of 12.9%.
• Substantial growth in sub-sectors like banking &
insurance (11.8%), real estate, ownership of dwelling
and business services (10%), Hotels & Restaurants
(0.5%) and Railways (0.3%)
13. State wise Contribution towards Service
Sector
• Service sector is dominant in most of the states of India
• In the Share of GSDP, states and Union Territories like
Chandigarh, Delhi, Kerala, Mizoram, West Bengal, , Tamil
Nadu, Maharashtra, Nagaland, Tripura and Karnataka have
higher share than all - India share.
• Chandigarh and Delhi at 86.9% and Mizoram at 66.1%
14. Trade, Hotels & Restaurants
• Includes services like Wholesale, Retail, E-Commerce,
Accommodation and Food and Beverages
• This sector has attracted maximum FDI (2001-2014)
amounting to US$ 41,755.46 million (18% of total FDI Flow)
(According to Department of Industrial Policy and
Promotions)
• Companies like Zomato, Snapdeal, FoodPanda are expanding
in a large scale
• E-Commerce sector is expected to give jobs to 150000 people
within the next 2-3 years
15. Transport, Storage and Communications
• Includes local transport, tourism,
Postal and courier services, Space transport services like
railway, waterways, roadways & airways
• Ola cabs plans to scale up operations to 100 cities from 19
cities
• Aviation sector has signs for revival with new players like Air
Asia and Tata- SIA entering the market
• FDI policy in railway are proposed to be revised to encourage
more FDI in rail and to foster creation of world class rail
infrastructure
• Tourism has seen steady growth from 4.45 million arrivals in
2006 to nearly 7 million in 2013
16. Finance, Insurance, Real Estate &
Business Services
• Includes banking and financial services, insurance , Rent &
Lease of property, machinery, tools, software, etc. R&D, Legal
and Accounting services, Tax, consultancies, PR, Advertising
& Media, management services, architectural services,
Engineering, designing, telecommunication, etc.
• Entertainment & Media sector is projected to grow @ 14.2 per
annum in 2018.
• Business processing and IT Sectors are one of the fastest
growing sectors in India (10.3% in 2013-14)
• Logistics sector valued at US$ 101 billion is expected to grow
@ 10% per annum
• Mobile services revenue is expected to touch US$37 billion in
2017 growing @ 5.2% annually
19. Construction
• Construction attracts FDI of US$1226 millions in
2013-14 contributing to 11% of total share
• Sector is growing by 1.6% in2013-14. Expected to
grow further
20. Community, Social & Personal Services
• Includes government services like administrative, defense,
legislative, social security, etc. Religious Services, service of
artists, authors, sportsmen, beauty and physical wellness,
education, healthcare and medical, etc.
• This sector grew @ 5.6% in 2013-14 and it is expected to
grow @ 9.1% in 2015
22. Issues in service sector
• Nodal Agency and promotion for services
• Disinvestment
• Collateral free soft loan credit needs
• Revision and amendment of tax, trade policies and laws
related to services
• Investment in Infrastructure development for delivering better
service
23. Road Ahead
• Improvement in global growth and recovery in industrial
growth will drive the services sector to grow 7.4 per cent in
FY16
• Loss of growth momentum in commodity-producing sectors
had adversely impacted transport and storage sectors over the
past two years, this is expected to change in FY16
• The financing, insurance, real estate and business services
sectors are also expected to continue their good run in FY16
• With urbanization of many small villages and towns,
construction sector is about to see tremendous growth
potential
• Mobile services revenue is expected to touch US$37 billion in
2017 growing @ 5.2% annually
