The document discusses India's overdependence on the service sector. It notes that while the service sector contributes nearly half of India's GDP and is the largest and fastest growing sector, overdependence on it is not good for the economy and can lead to issues like unemployment. The service sector provides employment to around 52% of the working population but lacks capital formation. There is a need for India to develop its agriculture and manufacturing sectors further to balance economic growth and employment opportunities across different sectors.

1. OVERDEPENDENCE ON SERVICE SECTOR

2. Service Sector
 The portion of the Economy that produces intangible goods.
 The part of the Economy that includes individuals & businesses that
produce Services rather than goods.
 “Soft” parts of the Economy.
People offer their knowledge & time to improve productivity,
performance, potential & sustainability.
Production of services instead of end products.
Provision of services to other businesses as well as final consumer.
Focus is on people interacting & serving the customer rather than
transforming physical goods.

3. Service Sector of Indian Economy
 The service industry forms a backbone of Social & Economic
development of a region.
 It has emerged as the largest & fastest growing sectors in the
world economy, making higher contribution to global output &
employment.
 It is the large & most dynamic part of Indian Economy both in
terms of employment potential & contribution to National
Income.
 Nearly half of India’s GDP comes from service sector.

4. Service Sector Includes
Government
Trade
Hotels & restaurants
Railways
Other Transport & Storage
Communication (Post,
Telecommunication)
Banking
Insurance
Dwellings, Real Estate
Public Administration,
Defense
Personal Services
Community Services
Other Services
Business Services
Information Technology
Education
Franchising
Waste Disposal

5. Role of Service Sector in Indian Economy
1) Increase share in GDP
• The services sector’s share in India’s GDP increased consistently since its
independence.
• According to provisional figures for fiscal year 2014, services sector
increased to nearly 60 % contribution to the GDP & has made rapid
strides and emerged as the largest and fastest-growing sector of the
economy.
• Besides being the dominant sector in India’s GDP, it has also contributed
substantially to foreign investment flows, exports, and employment.
• India’s services sector covers a wide variety of activities that have
different features and dimensions.

7. The Gross Domestic Product (GDP) in India expanded 7 percent in the second quarter of 2015
over the same quarter of the previous year, slowing from a 7.5 percent growth in the previous
quarter and below market expectations.
GDP Annual Growth Rate in India averaged 6.01 percent from 1951 until 2015, reaching an all
time high of 11.40 percent in the first quarter of 2010 and a record low of -5.20 percent in the
fourth quarter of 1979.
Current GDP growth rate

8. 2) Providing support to other sectors
• Service sector provide support to agriculture & industries by providing a number of
services in the form of Financial services , transport services, Storage services ,
Personal services & so on
• No sector can perform & prosper in absence of network of various financial & other
service

9. 3) Contribution to Exports
Services exports from India comprises Travel, Transportation, Communication, Financial
Services, Software services Agency services, Royalties, Copyright & license fees & management
services.
Exports in India is expected to be 22830.39 USD Million by the end of this quarter, according to
Trading Economics global macro models and analysts expectations. Looking forward, we
estimate Exports in India to stand at 26000.00 in 12 months time. In the long-term, the India
Exports is projected to trend around 38178.55 in 2020, 53938.55 in 2030 and 89938.55 USD
Million in 2050, according to our econometric models.

10. 4) Providing Employment
•Service sector comprised about 52.36 % of working-age population in India in
2013, according to the World Bank.
•In 2007-8 around 25% of working population was dependent on Service sector
for occupation.
•Working age population is the ratio of dependents--people younger than 15 or
older than 64--to the working-age population--those ages 15-64.
Data are shown as the proportion of dependents per 100 working-age population.

11. •Currently India’s GDP is heavily tilted in favor of service sector..
•3 sectors which contribute to GDP of any country are :
(a)Agriculture (b) Industry / Manufacturing & (c) Services.
Current contribution of these sectors in Indian Economy are as follows
1.1 %
6.8 %
8.9 %
Service Sector
Manufacturing Sector
Agriculture Sector
Over Dependence on Service Sector

13. Why Service Sector is the biggest contributor ?
 Population
 Most of them offer services & not the investments.
Agriculture sector
Industries sector
Poor class population
Middle class population
So most of the economic transactions happen in service sector.
Largest employers Indian Railways, India Post or TCS Services sector.
Biggest export
India is not a trade surplus country so our economy is mainly driven by domestic
consumption.
Contribute but can't employ all 100+ people
Don’t have Capital formation
IT

14. Barriers affecting growth of Service Sector
•The service sector has been increasingly contributing to India’s GDP,GDP
growth, employment, trade, & investment.
•However there are some concerns.
•In past one year India’s GDP & service sector has been slow & service
sector has not been able to create quality management
•The following are the key Barriers that are impending the growth of the
services sector are :-
1) Service Sector focus in Policy making
2) Data on Services

15. 3) FDI Restrictions
4) Service sector employment
5) Taxes & Subsidies

16. Market opening allowed new firms to enter new markets and expand, offering new
services (innovate) & creating jobs.
1) Opening markets can help create new series
Further opening and integration of services markets.
Government should work together to design policy
Policy should lay down Short term strategy (5 yr plan) & long tem strategy (10-15
Broadening human resources policies
2) Government Role
Precautions to be taken to Overcome Barriers
3) Data should be collected on a yearly basis
4) India needs to build up domestic consensus
5) FDI liberalization should be technology natural
6) Indirect employment through SME’s

17. Last Updated:26 February, 2015
•The services sector with an around 57 per cent contribution to the gross domestic
product (GDP), has made rapid strides in the last few years and emerged as the largest
and fastest-growing sector of the economy.
•The compound annual growth rate (CAGR) of services sector GDP was 8.5 per cent for
the period 2000-01 to 2013-14.
•The shift from primary and secondary activities to tertiary activities by the citizens of a
country indicates that it is on the path of progress.
Market Size
•The services sector in India comprises a wide range of activities such as transportation,
logistics, financial, business process outsourcing services, healthcare, trading, and
consultancies, among many others.
•The logistics sector in India which was valued at US$ 101 billion in 2013 is expected to
grow by 10 per cent per . according to Mr. R Dinesh, Chairman, CII Institute of Logistics
Advisory Council and Joint Managing Director, TVS Sons Ltd.
•The growth in the ITeS sector has resulted in increasing competition between the
different brands in the e-commerce sector. As a result, it is expected that the e-
commerce sector will generate close to 150,000 jobs within the next 2-3 years.
Current News about Service Sector

18. Investments
•The Indian services sector has attracted the highest amount of FDI equity inflows in
the period April 2000-December 2014 about 18 per cent of the total foreign inflows,
according to the Department of Industrial Policy and Promotion
Some of the developments and major investments by companies in the services
sector in the recent past are as follows:
•Zomato has acquired Cibando, one of Italy’s largest restaurant search services. With
this acquisition, the company has a presence in 20 countries. Zomato further aims to
widen its international presence by entering 15 more countries in 2015.
•The private security services industry in India is expected to register a growth of over
20 per cent over the next few years, doubling its market size to Rs 80,000 crore (US$
12.94 billion) by 2020.

19. News as on 3rd September 2015 at 12.50pm
•Service sector improved in august as new orders received by private firms increased
at the fastest rate in five months.
•Economic growth across India was boosted by improvements in service sector.
•The GDP data released on august 31st also showed the growth rate slipping to 7% in
the APRIL – JUNE quarter
Some services like software and telecom were big ticket items that gave
India a brand image in services

20. Conclusion
The service sector is very important for India, as it is contributing
half of the GDP growth in the Indian Economy.
But Overdependence on Service Sector is not good for the
Economy & will be responsible for ill state of Indian Economy &
unemployment.
Therefore Employment should increase for development of
service sector.
As India is developing very fastly there is a need for change in the
quality & also the speediness of the services.