The document discusses the growth of India's service sector, with a focus on the IT/ITES sector. It notes that the service sector now represents over half of India's GDP and is the fastest growing sector. The IT/ITES sector in particular has transformed India's image globally and is a major contributor to the economy. The document traces the history from pre-liberalization policies in the 1950s-1980s that focused on internal markets and public sector dominance to the economic reforms beginning in 1991 that opened the economy and boosted growth. The IT/ITES sector benefited greatly from these reforms and liberalization, growing to become a star performer and global leader, though it faced challenges from the 2008 global economic crisis. Overall the sector remains

1. CMDR DHARWAD
organized
UGC sponsored A TWO DAY
NATIONAL SEMINAR

3. SERVICE SECTOR LED ECONOMIC
GROWTH IN INDIA:
A STUDY ON IT/ITES SECTOR

4. INTRODUCTION
• India has a kaleidoscopic variety and rich
cultural heritage.
• Though it is considered as agrarian
economy it has achieved vast growth in
other sectors.
• Service sector forms a backbone of
social & economic development of a
nation.

5.  Its growth rate has been higher than that of the
agriculture and manufacturing sector
 The share of services in India’s GDP at factor cost
(at current prices) rose from 33.3 per cent
(1950–1951) to 56.5 per cent in 2012–13, as per
advance estimates.
 During FY 2014–15, the sector is projected to
grow at a healthy 5.6 per cent, according to
National Council of Applied Economic Research
(NCAER).

6. The service sector has emerged as
the largest and fastest growing
sectors in the world economy making
higher contribution to the global
output and employment

7. ECONOMIC LIBERLIZATION IN INDIA
Economic liberalization started way back in 1991.
with goal of making the economy more market-oriented
and expanding the role of the private
and foreign investment.
 Specific changes include the reduction in import
tariffs, deregulation of markets, reduction of
taxes, and greater foreign investment.
 High economic growth recorded by the country
in the 1990s and 2000s.

8. PRE-LIBREALIZATION POLICIES:
Believed in the internal markets.
Five-Year Plans of India resembled central
planning in the Soviet Union.
Steel, mining, machine tools, water,
telecommunications, insurance, and electrical
plants, among other industries, were
effectively nationalized in the mid-1950s.

9. Elaborate licenses, regulations and the
accompanying red tape, commonly referred to
as License Raj, were required to set up
business in India between 1947 and 1990.

10. GROWTH RATE OF REAL GDP AND ITS MAIN
SECTORS, 1951-52 TO 1987-88
PRIMARY SECTOR SECONDARY SECTOR TERITIARY SECTOR GDP
1950-51/1959-
60
1960-61/1969-
70
1970-71/1979-
80
1980-81/1987-
88
2.7
1.6 1.8
2.1
6
5.3
4.6
6.9
4
4.3 4.5
6.3
3.6
3.2 3.4
4.9

12. IT/ITES SECTOR
A Star performer

13. It/ites can do for india, what automobile did for japan & oil for saudi
arabia
- Mckinsey & co.
Transforming India’s image from a slow moving
bureaucratic economy to a land of innovative
entrepreneurs and a global player in providing
world class technology solutions and business
services.

14. STRUCTURE OF INDIAN IT
INDUSTRY
IT/ITES
SECTOR
VALUE
PROPOSITION
COST
ADVANTAGE
QUALITY/
MATURITY
OF
PROCESS
EASE OF
SCALABLITY

15. The impact of pre and post liberalization
on GDP of India:
4.2
5.8
5.8
2.7
5.2
2.5
5.9
6.3
4.3
5.8
5.9
4.8
7.5
7.8
3.9
0 10 20 30 40
SERVICES
MANUFACTURING
INDUSTRY
AGRICUTURE & ALLIED
REAL GDP GROWTH
3.6
4
6.2
2.9
1.3
4.4
4
5.6
4.4
6.4
5.3
4
5.7
5.7
3.7
7
6.4
5.2
0.9
4.1
1950'S
1960'S
1970'S
1980'S
1990-91
1991/92-1996/97
1997/98-2002/03

16. A severe macroeconomic and balance of
payment crisis in 1991, following to first gulf war
and fall of Soviet Union led to the fear of lagging
behind China in economic development led in
1978, forced the Indian policy makers to focus on
new economic policies
 The major share in GDP is of service from 1991
to 2003 i.e. because of the liberalization and
changes in government regulations.

17. The Global Meltdown Of 2008-09 And
Its Impact On Indian IT Sector:
THE DOMINO EFFECT

18. OVERALL GROWTH PERFORMANCE OF
IT-BPM SECTOR
TOTAL IT -BPM
SERVICE
EXPORTS DOMESTIC
59.9
47.1
12.8
64
49.7
14.3
76.3
59
17.3
87.7
68.8
19
95.2
75.8
19.3
VALUE IN USD BILLION
2008-09 2009-10 2010-11 2011-12 2012-13E

19. Estimated decelerated growth in 2012-13 of
8.4% as compared to 2011-12 of 15%.
20%
10%
0%
GROWTH RATE
15% 8.40%
TOTAL IT-BPM
SECTOR
2011-12
2012-13E

20. IT/ITES GROWTH PROSPECTS :
Growth in global IT spending
Emergence of Disruptive technologies
such as cloud, mobility, analytics, social media,
and flexible product portfolios are reshaping
the Indian IT industry.
these new disruptive technologies and their
applications could have a global economic
impact of USD14–33 trillion in 2025.
Growth in markets beyond the US and EU.
Growth in government investments

21. CHALLENGES
 High attrition
 Weaker infrastructure
 Competition from other low-cost countries
 US Immigration Bill and EU Data Protection
Bill

22. CONCLUSION
 It was after the liberalization in 1991 and the new
wave of globalization that India was able to make its
mark in global market and it was IT/ITES sector which
played a pivotal role.
 India’s nature to manage its savings, which helped it
to be unaffected. India’s trade surplus with the US
was healthy and India’s export to US was only 3% of
GDP. Hence the effect was not that drastic.
 Even though there has been slow down in economy
and GDP rate has been fluctuating, major share in
the Indian economic growth still remains from the
service sector

23. As the new scenario unfolds, it is getting clear that the
future growth of IT and ITeS will be fuelled by the
verticals of climate change, mobile applications,
healthcare, energy efficiency and sustainable energy.
Traditional business strongholds will make way for new
geographies, there would be new customers and more
and more of SMEs will go for IT application and services.

24. THANK YOU
PRESENTED BY
SAHANA HIREMATH
M.Com (Final)
DR. S.G. HIREMATH
ASSOCIATE PROFESSOR