Growth of service sector in India

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DEFINITION

The segment of the economy that provides services to its consumers. This includes a wide range of businesses including financial institutions, schools, transports and restaurants.

THE VARIOUS SECTORS THAT COMBINE TOGETHER TO CONSTITUTE SERVICE INDUSTRY ARE:
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Trade Hotels and Restaurants Railways Other Transport & Storage Communication (Post, Telecom) Banking Insurance Dwellings, Real Estate Business Services Public Administration; Defense Personal Services Community Services Other Services

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OVER VIEW OF SERVICE SECTOR

Service Sector in India today accounts for more than half of India's GDP. According to data for the financial year 20062007, 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

GROWTH OF SERVICE SECTOR UNDER FIVE-YEAR PLAN

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First-five year plan(1951-56) The total plan of budget was 206.8 billion 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

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At the end of the plan period in 1956, five Indian Institutes of Technology (IITs) were started as major technical institutions.

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SECOND-FIVE YEAR PLAN(1956-61)

The 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. Transport and communication was given 23.6% of total budget(430 billion)

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OBJECTIVES OF SECOND YEAR PLAN

a sizeable increase in national income so as to raise the level of living in the country; rapid industrialization with particular emphasis on the development of basic and heavy industries; a large expansion of employment opportunities; and reduction of inequalities in income and wealth and a more even distribution of economic power.

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THIRD-FIVE YEAR PLAN(1961-1966)

The third plan stressed on agriculture Again there was more emphasize was given only on transportation in service sector which accounted to 21%.

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FOURTH-FIVE YEAR PLAN(1969-74)

A total outlay of Rs. 24,882 crores is envisaged for the Fourth 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. In service sector 14 major banks were nationalized

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FIFTH-FIVE YEAR PLAN(1974-79)

Stress was laid on employment, poverty alleviation, and justice. The plan also focused on self-reliance in agricultural production and defense

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SIXTH-FIVE YEAR PLAN(1980-85)

Called the Janata government plan, the sixth plan marked a reversal of the Nehruvian model. 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.

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SIXTH-FIVE YEAR PLAN(1980-85)

Tourism also expanded. The sixth plan also marked the beginning of economic liberalization Transport 12411.97 crores Communications and information and broadcasting 3124.67 Social services 14035.26

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OUTCOMES OF SIXTH-YEAR PLAN

The production of Computer Numerically Controlled (CNC) machine tools. The commissioning of the first electronic telecom exchange and the running of trains with trailing loads of 3000 tonnes.

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SEVENTH-FIVE YEAR PLAN(1985-89)

The plan lay stress on improving the productivity level of industries by up gradation of technology. Communication, Information and broadcasting 647.2 billion Posts 29.5 billion Telecommunications 453.8 billion Education, culture and sports 638.3 billion Health including medical 339.3 billion

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PERIOD BETWEEN 1989-91

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

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In 1991, India faced a crisis in Foreign Exchange (Forex) reserves, thus the country took the risk of reforming the socialist economy. P.V. Narasimha Rao also called Father of Indian Economic Reforms was the twelfth Prime Minister of the Republic of India had led one of the most important administrations in India's modern history overseeing a major economic transformation. 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.

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EIGHTH-FIVE YEAR PLAN(1992-97)

This plan can be termed as Rao and Manmohan model of Economic development Transport 879.10 billion Communication 2600 billion

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Financial services 10.21% Trade 9.06% Communication 14.31% Other services 6.22%

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NINTH-FIVE YEAR PLAN(1997-2002)

Total outlay was 85920 billion Transport 12132 billion 14.1 % Communication 4761 billion 5.5 %

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Financial services 8.93% Trade 5.86% Communication 17.14% Other services 8.19%

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CONTRIBUTION OF TRAVEL AND TOURISM TO GDP AND EMPLOYMENT

World Average(%) Indian (%) World rank

Contribution of Tourism and Travel Economy to GDP

Contribution of Tourism and Travel Industry to GDP Contribution of Travel and Tourism Economy Employment Contribution of Travel and Tourism Industry Employment

10.7

5.3

140

4.2

2.5

124

5.6

140

3.1

2.9

111

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TENTH-FIVE YEAR PLAN(2002-07)

The projected resource allocation of tenth year plan was 15,92,300 crores Transportation allocated 225977 crores Information Technology 5492 crores Post 1350 crores Tlcommunications 86984 crores Tourism 2900 crores

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ELEVENTH-FIVE YEAR PLAN(2007-2012)

Transportation allocated 202045 Information Technology 11048 Post 3536 Tlcommunications 80753 Tourism 4558

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MILE STONE IN THE GROWTH OF SERVICE SECTOR

The 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. The 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.

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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)

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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. 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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QUARTERLY ESTIMATES OF PRODUCTION FOR MAJOR COMPONENTS OF SERVICES SECTOR (RS CRORE)
Sub-sectors 06 2006-07 2005-06 2004-05 2006-07 2005-

% change over
1. Trade, hotels, 175025 Transport and communication (26.7) 2. Financing, insurance, real estate and business services 91527 (14.0) 3. Community, social and personal services 88,771 (13.5) All Services (1+2+3) 355323 (54.2) 154642 (25.7) 138390 (24.9) 13.2 11.7

84021 (13.9) 82637 (13.7) 321300 (53.3)

77245 (13.9) 77009 (13.9) 292644 (52.7)

8.9

8.8

7.4

7.3

10.6

9.8

GDP at factor cost 8.5

656,064

602476

555,075

8.9

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INDIA'S NET RECEIPTS FROM TRAVEL ON BALANCE OF PAYMENTS

Year Receipts Payments (in million US$) (million no) 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 3497 3137 3312 5037 6495 7789 2804 3014 3341 3602 5510 6421 693 123 -29 1435 985 1368 2.7 2.4 2.5 2.9 3.5 4.1 Net Receipts Foreign Tourist Arrivals