Growth of service sector in India

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M ›he segment of the economy that provides

services to its consumers. ›his includes a wide
range of businesses including financial
institutions, schools, transports and
restaurants.

Also known as "tertiary sector of industry," or

"service industry/sector".
 
 
   by santosh R.N.S.I.› coll

 
  
 
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M ›rade
M Hotels and Restaurants
M Railways
M Other ›ransport & Storage
M Communication (Post, ›elecom)
M Banking
M Insurance
M Dwellings, Real Estate
M Business Services
M Public Administration; Defense
M Personal Services
M Community Services
M Other Services

 

  

M Service Sector in India today accounts for more

than half of India's GDP.
M According to data for the financial year 2006-
2007, the share of services, industry, and
agriculture in India's GDP is 55.1 per cent, 26.4
per cent, and 18.5 per cent respectively



  
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M irst-five year plan(1951-56)

D ›he total plan of budget was 206.8 billion
D Among the total plan transportation and communication
had got allocated to 24% i.e., 49.7 billion and social
services accounted for 16.64% 33 billion
D At the end of the plan period in 1956, five Indian Institutes
of ›echnology (II›s) were started as major technical
institutions.
  `
 
 
M ›he second five-year plan focused on industry, especially
heavy industry. Domestic production of industrial products
was encouraged, particularly in the development of the
public sector.
M ›ransport and communication was given 23.6% of total
budget(430 billion)

OBJEC›IVES
M a sizeable increase in national income so as to raise the
level of living in the country;
M rapid industrialization with particular emphasis on the
development of basic and heavy industries;
M a large expansion of employment opportunities; and
M reduction of inequalities in income and wealth and a more
even distribution of economic power.

`
 
 
M ›he third plan stressed on agriculture
M Again there was more emphasize was given only on
transportation in service sector which accounted to 21%.

OUR›H-IVE YEAR PLAN(1969-1974)

M A total outlay of Rs. 24,882 crores is envisaged for the
ourth Plan. of the aggregate outlay, Rs. 15,902 crores is in
respect of the public sector Plan and Rs, 8,980 crores for
the private sector.
M In service sector 14 major banks were nationalized



 
 

M Stress was laid on employment, poverty

alleviation, and justice. ›he plan also focused
on self-reliance in agricultural production and
defense

 
  ! 

M Called the Janata government plan, the sixth plan marked a

reversal of the Nehruvian model.
M When Rajiv Gandhi was elected as the prime minister, the
young prime minister aimed for rapid industrial development,
especially in the area of information technology. Progress
was slow, however, partly because of caution on the part of
labor and communist leaders.

 
  ! 

M ›ourism also expanded.

M ›he sixth plan also marked the beginning of economic
liberalization
M ›ransport 12411.97 crores
M Communications and information and broadcasting
3124.67
M Social services 14035.26
  

 

M ›he production of Computer Numerically Controlled

(CNC) machine tools.
M ›he commissioning of the first electronic telecom
exchange and the running of trains with trailing loads
of 3000 tonnes.
  
 
   

M ›he plan lay stress on improving the productivity level of

industries by up gradation of technology.
M Communication, Information and broadcasting 647.2
billion
M Posts 29.5 billion
M ›elecommunications 453.8 billion
M Education, culture and sports 638.3 billion
M Health including medical 339.3 billion
 O
  
 

M 1989-91 was a period of political instability in India and

hence no five year plan was implemented. Between 1990
and 1992, there were only Annual Plans
M In 1991, India faced a crisis in oreign Exchange (orex)
reserves, thus the country took the risk of reforming the
socialist economy.
M At that time Dr. Manmohan Singh launched India's free
market reforms that brought the nearly bankrupt nation
back from the edge. It was the beginning of privatization
and liberalization in India.
 
 
 "

M ›his plan can be termed as Rao and Manmohan

model of Economic development
M ›ransport 879.10 billion
M Communication 2600 billion
M inancial services 10.21%
M ›rade 9.06%
M Communication 14.31%
M Other services 6.22%

 
 "!!"

M ›otal outlay was 85920 billion

M ›ransport 12132 billion 14.1 %
M Communication 4761 billion 5.5 %
M inancial services 8.93%
M ›rade 5.86%
M Communication 17.14%
M Other services 8.19%
 
 
  

O  O 
World Indian World
Average(%) (%) rank

Contribution of ›ourism and ›ravel Economy 10.7 5.3 140

to GDP

Contribution of ›ourism and ›ravel Industry 4.2 2.5 124

to GDP

Contribution of ›ravel and ›ourism Economy 8 5.6 140

Employment

Contribution of ›ravel and ›ourism Industry 3.1 2.9 111

Employment
 
 
 "!!"!

M ›he projected resource allocation of tenth year plan

was 15,92,300 crores
M ›ransportation allocated 225977 crores
M Information ›echnology 5492 crores
M Post 1350 crores
M › l communications 86984 crores
M ›ourism 2900 crores


 O
#
Year World earnings Earnings by India Share of India in
world earnings

2002 487 2.9 .60

2003 533 3.5 .66

2004 633 4.8 .75

2005 678 5.7 .80

2006 735 6.6 .89



 
  
 
    
  
S Year Rate of growth Percentage
No. share in GDP
1 2000-01 -2.0 5.5
2 2001-02 9.1 5.7
3 2002-03 11.3 6.1
4 2003-04 2.2 5.8
5 2004-05 8.8 5.9
6 2005-06 14.0 6.1
7 2006-07 13.0 6.3
8 2000-01 to 2006-07 8.1 5.9
(average)
   
 
 "!!
"!"
M ›ransportation allocated 202045
M Information ›echnology 11048
M Post 3536
M › l communications 80753
M ›ourism 4558
   


 
 

M ›he emergence of India as one of the fastest growing

economies in the world during the 1990s is
attributable to the rapid growth of its services sector
to a great extent.
M ›he sector has been experiencing double-digit since
2004-05 importantly, a strong growth of 10 % in
2005-06 has been instrumental in providing an
impetus to overall real sector activity in the economy
and propelling it to record a sturdy growth of 8.4 per
cent.
M Œeynote reforms, initiated by the then inance
Minister Dr Manmohan Singh in 1991, provided
the momentum for a major reduction of the role of
the public sector in the economy, a degree of
deregulation, and greater integration of India·s
economy into international markets. India·s
entrepreneurial spirit was unleashed.
M Subsequent to this, the sector has continued to exhibit
vibrant growth (10.6 per cent) during the first quarter of
2006-07 over the corresponding period of the previous year,
mainly propelled by growth in ¶trade, hotels, transport and
communication· (13.2 per cent) followed by ¶finance,
insurance, real estate and business services· (8.9 per cent)
M Due to the structural transformation of the Indian economy
in the new millennium in favor of a service-dominated
economy, the share of the services sector in the total GDP
has increased notably from 49.8% in 2000-01 to 54% in
2005-06.
M During the first quarter (April-June) 2006-07, the services
sector has accounted for a share of 54.2% as compared to
53.3% in the comparable period during last year
 *

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Sub-sectors 2006-07 2005-06 2004-05 2006-07 2005-06
% change over
1. ›rade, hotels, 175025 154642 138390 13.2 11.7
›ransport
and communication (26.7) (25.7) (24.9)
2. inancing, insurance,
real estate
and business services 91527 84021 77245 8.9 8.8
(14.0) (13.9) (13.9)
3. Community, social
and personal services 88,771 82637 77009 7.4 7.3
(13.5) (13.7) (13.9)

All Services (1+2+3) 355323 321300 292644 10.6 9.8

(54.2) (53.3) (52.7)

GDP at factor cost 656,064 602476 555,075 8.9 8.5

  
 O

 
   O 
Year Receipts Payments Net Receipts oreign
›ourist
Arrivals
(in million US$) (million no)

2000-01 3497 2804 693 2.7

2001-02 3137 3014 123 2.4
2002-03 3312 3341 -29 2.5
2003-04 5037 3602 1435 2.9
2004-05 6495 5510 985 3.5
2005-06 7789 6421 1368 4.1
 

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M New Delhi, eb 15 (IANS) India's service sector could
see slower growth, said a Confederation of India
Industry (CII) report released here Sunday.
M According to CII, recent data on specific service sector
activities gives a mixed picture - while there has been
a sharp drop in indicators such as tourist arrivals or air
freight and passenger movements, railway traffic and
cellular subscriber growth have been holding up.
M In banking, deposit and credit growth have begun to
slow down - though only moderately.