Competitive Exams: General Studies Economics Services Sector

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Services Sector

  1. Services sector is the engine of growthis the newly coined growth slogan which has gained enough momentum in present day globalised world. And, like other economies, India in nowhere behind in harnessing this sector. Services sector has a great contribution in Indian growth miracle of 8 − 9 percent in the last one decade.

Emerging Opportunities in Services Sector

  1. Services sector is heterogeneous and wide. For simplification, this sector can be categorize into three
  2. Traditional services Includes tourism and hospitality sector eg. Hotel restaurant etc. Retail trade and wholesale trade service storage, transport etc.
  3. Modern services Includes business services, software, IT, IT enabled Services, telecommunication, banking etc.
  4. Hybrid of traditional and modern services includes Education, Health etc.
  5. Similarly, retail trade and wholesale trade also generate employment in the economy. And Foreign Direct investment (FDI) in multi-brand retain can be step-ahead measure in deepening of retail trade services in Indian Economy.
  6. On the other hand, modern service sector is relatively skill intensive. Especially, IT, ITeS, Software Services require high level of skills. In the last one decade export services sector like ITeS, telecommunication etc, have been registering high growth on account of General Agreement on Trade in Services (GATS) of WTO and opening up of global trade in services. Despite this optimism, it is argued that this skill-intensive services sector has driven out substantial rural labour force because of lack of high level skill.
  7. Therefore, this emerging trend and opportunities in service sector can be utilized in deriving further productivity gain and employment in Indian Economy and simultaneously it can accommodate burgeoning Indian labour force. And this could be a cornerstone for Indian Economy in its quest for Inclusive Growth.


  1. The opportunities in this sector is surrounded by certain challenges for India as well.
  2. The foremost challenge is the collection of reliable data to harness the growth potentiality of this sector. Although, for the first time a separate chapter on ‘Service Sector’ has been added in Economic Survey 2010 − 11 a lot needs to be done.
  3. Secondly, Skill Enhancement of Human Resource as both traditional and modern services require differentiated Skills and National Skill Development Scheme initiated by XIth Five Year Plan is a welcome step in this direction.
  4. Investment in social infrastructure like health and medicine, education etc. Investment in elementary education and secondary education is necessary to utilize the Indian Demographic Dividend and others, like opening up of quality ITI՚s, Hotel Management Institute etc.


It is evident that by and large the emerging Services sector is not only the engine of growth but it can bring about inclusive growth in India as well for which our XIth Five Year plan had laid down its foundation. The

Indian policy makers need to develop a prudent service sector specific policy and an intra-service sector specific policy as this could be a key to poverty reduction, inclusive growth and overall development. This could unleash a new slogan i.e.. . Services sectorthe engine of inclusive growth.

Courtesy: Yojana