Services Based Economic Growth

“Services Based Economic Growth”

Growth of GDP in India has not followed the traditional sequence of increasing sectoral contribution from agriculture to industrial to services. Period starting late 1980s onwards the contribution of services sector to the overall GDP has started increasing and had an exponential growth with liberalization of economy.

Traditionally India had been an agriculture driven economy, though industrial growth has been fostered by support from the government, and the industrial sector growth and contribution have not been significant.

The opportunity for growth which has opened up with changing dynamics of liberalization and the demand for services at an affordable cost have helped growth in services sector in natural mode.

Hence it may be correct to say the service sector growth and contribution to GDP is not premature but a natural phenomenon of an opportunity space being filled up by services.

As the services industry has grown, the industrial sector has also seen a growth which may not be as high as services sector. Traditional manufacturing industries like steel and automobile have also grown significantly and have been able to expand the shores of India to become MNCs of repute.

The GDP of India is not entirely dependent on the business from services and other countries. The growth is economy has been consistent over the last decade and has been sustained even with world economy had withered under recession. The balance in contribution of various sectors has resulted in maintaining a steady growth.

Over the last 15 years services sector in India has not only shown sustainable growth but also has matured to be able to offer services that are of quality sought by countries across the world.

If the government embarks on any measures to curb growth in services sector, it may result in deceleration of the growth. If the government is committed to drive India to be a developed economy, the best possible strategy would...