Growth and performance of services sector of India

The present paper provides a brief overview of performance, prospects and problems encountered by the services sector in India's economy. The service sector has emerged as the largest and fastest-growing sector in the Indian economy in the last two decades, providing nearly 60 per cent of output and, larger share of employment. Its growth has in fact been higher than the growth in agriculture and manufacturing sector. Along with this, worldwide there has been a marked shift of FDI away from manufacturing sector towards services sector. A number of sector specific measures have been taken up by the government of India to promote IT and ITES and other sectors like telecom, organized retail, hospitality, entertainment and financial services sectors. The typical pattern of growth seen in recent decades is that there is a significant transfer of economic activity from agriculture to industry in the early phases of rapid growth. The services sector is largely responsible for the Indian growth miracle.