 The service sector now accounts for more than half of India's GDP: 51.

16 per cent
in 1998-99. This sector has gained at the expense of both the agricultural and
industrial sectors through the 1990s. The rise in the service sector's share in GDP
marks a structural shift in the Indian economy and takes it closer to the fundamentals
of a developed economy  (in the developed economies, the industrial and service
sectors contribute a major share in GDP while agriculture accounts for a relatively lower
share).

 The service sector's share has grown from 43.69 per cent in 1990-91 to 51.16 per
cent in 1998-99.  In contrast, the industrial sector's share in GDP has declined from
25.38 per cent to 22.01 per cent in 1990-91 and 1998-99 respectively.  The
agricultural sector's share has fallen from 30.93 per cent to 26.83 per cent in the
respective years.

 Some economists caution that if the service sector bypasses the industrial sector,
economic growth can be distorted. They say that service sector growth must be
supported by proportionate growth of the industrial sector, otherwise the service sector
grown will not be sustainable. It is true that, in India, the service sector's contribution
in GDP has sharply risen and that of industry has fallen (as shown above). But, it is
equally true that the industrial sector too has grown, and grown quite impressively
through the 1990s (except in 1998-99). Three times between 1993-94 and 1998-99,
industry surpassed the growth rate of GDP. Thus, the service sector has grown at a
higher rate than industry which too has grown more or less in tandem. The rise of the
service sector therefore does not distort the economy.

 Within the services sector, the share of trade, hotels and restaurants increased
from 12.52 per cent in 1990-91 to 15.68 per cent in 1998-99. The share of transport,
storage and communications has grown from 5.26 per cent to 7.61 per cent in the
years under reference. The share of construction has remained nearly the same during
the period while that of financing, insurance, real estate and business services has
risen from 10.22 per cent to 11.44 per cent.

 The fact that the service sector now accounts for more than half the GDP probably
marks a watershed in the evolution of the Indian economy.

2 nd article-

Service Sector in India today accounts for more than half of India's GDP. According to data
for the financial year 2006-2007, 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. The fact that the service
sector now accounts for more than half the GDP marks a watershed in the evolution of the
Indian economy and takes it closer to the fundamentals of a developed economy.

Services or the "tertiary sector" of the economy covers a wide gamut of activities like trading,
banking & finance, infotainment, real estate, transportation, security, management &
technical consultancy among several others. The various sectors that combine together to
constitute service industry in India are:

 Trade
 Hotels and Restaurants
 Railways
  Other Transport & Storage
 Communication (Post, Telecom)
 Banking
 Insurance
 Dwellings, Real Estate
 Business Services
 Public Administration; Defence
 Personal Services
 Community Services
 Other Services

There was marked acceleration in services sector growth in the eighties and nineties,
especially in the nineties. While the share of services in India's GDP increased by 21 per cent
points in the 50 years between 1950 and 2000, nearly 40 per cent of that increase was
concentrated in the nineties. While almost all service sectors participated in this boom,
growth was fastest in communications, banking, hotels and restaurants, community services,
trade and business services. One of the reasons for the sudden growth in the services sector in
India in the nineties was the liberalisation in the regulatory framework that gave rise to
innovation and higher exports from the services sector.

The boom in the services sector has been relatively "jobless". The rise in services share in
GDP has not accompanied by proportionate increase in the sector's share of national
employment. Some economists have also cautioned that service sector growth must be
supported by proportionate growth of the industrial sector, otherwise the service sector grown
will not be sustainable. In the current economic scenario it looks that the boom in the services
sector is here to stay as India is fast emerging as global services hub.

3 rd article-

Service sector is the lifeline for the social economic growth of a country. It is today the
largest and fastest growing sector globally contributing more to the global output and
employing more people than any other sector.

The real reason for the growth of the service sector is due to the increase in urbanization,
privatization and more demand for intermediate and final consumer services. Availability of
quality services is vital for the well being of the economy.

In advanced economies the growth in the primary and secondary sectors are directly
dependent on the growth of services like banking, insurance, trade, commerce, entertainment
etc.

Indian Service Sector

In alignment with the global trends, Indian service sector has witnessed a major boom and is
one of the major contributors to both employment and national income in recent times. The
activities under the purview of the service sector are quite diverse. Trading, transportation
and communication, financial, real estate and business services, community, social and
personal services come within the gambit of the service industry.

One of the key service industry in India would be health and education. They are vital for the
country’s economic stability. A robust healthcare system helps to create a strong and diligent
human capital, who in turn can contribute productively to the nation’s growth.

Post Liberalization
The Indian economy has moved from agriculture based economy to a knowledge based
economy. Today the IT industry and ITE'S industry are the dominant industry in the service
sector. Media and entertainment have also seen tremendous growth in the past few years.

Subsectors

Information Technology Industry

The Information Technology industry has achieved phenomenal growth after liberalization.
The industry has performed exceedingly well amidst tough global competition. Being
knowledge based industry; India has been able to leverage the global markets, because of the
huge pool of engineering talent available and the proficiency in English language among the
middle class.

ITES sector
The ITES sector has also leveraged the global changes positively to emerge as one of the
prominent industries. Some of the services covered by the ITES industry would be:

 Customer interaction services -Non voice and Voice.

 Back office, revenue accounting, data entry, data conversion, HR services.
 Medical Transcription.
 Content development and animation.
 Remote education, market research and GIS

Retailing
Prior to liberalization, India had one of the most underdeveloped retail sectors in the world.
After liberalization the scenario changed dramatically. Organized retailing with prominence
on self service and chain stores has changed the dynamics of retailing. In most of the tier I
and tier II cities supermarket chains mushroomed, catering to the needs of vibrant middle
class. This indirectly contributed to the growth of the packaged food industry and other
consumer goods.

Financial Services-Banking And Insurance

Prior to liberalization these two sectors were controlled and regulated by the government.
Nationalized banks and insurance companies had a firm grip over the market. After
liberalization the banking and insurance domain opened up for private participation.

Banking Sector
The three major changes in the banking sector after liberalization are:

 Step to increase the cash outflow through reduction in the statutory liquidity and cash
reserve ratio.
 Nationalized banks including SBI were allowed to sell stakes to private sector and
private investors were allowed to enter the banking domain. Foreign banks were given
greater access to the domestic market, both as subsidiaries and branches, provided the
foreign banks maintained a minimum assigned capital and would be governed by the
same rules and regulations governing domestic banks.
  Banks were given greater freedom to leverage the capital markets and determine their
asset portfolios. The banks were allowed to provide advances against equity provided
as collateral and provide bank guarantees to the broking community.

Insurance Sector
The Insurance Regulatory and Development Authority Act 1999 (IRDA Act) allowed the
participation of private insurance companies in the insurance sector. The primary role of
IRDA was to safeguard the interest of insurance policy holders, to regulate, promote and
ensure orderly growth of the insurance industry. The insurance sector could invest in the
capital markets and other than traditional insurance products, various market link insurance
products were available to the end customer to choose from.

Some of the prominent insurance companies are:

 Bajaj Allianz Insurance Corporation

 Birla Sun Insurance Co Ltd
 HDFC Standard Insurance Co Ltd
 ICICI Prudential Insurance Co Ltd
 Max New York Insurance Co Ltd
 Tata AIG Insurance Co Ltd

Future Trends

 Globally outsourcing industry would continue to grow.

 Following the success of US and UK, more countries in the European Union would
outsource their business.
 Technological power shift from the West to the East as India and China emerge as
major players.
 Political backlash over outsourcing would come down as companies reap the benefit
of outsourcing.