SERVICES SECTOR GROWTH RATE IN INDIA GDP Services Sector Growth Rate in India GDP has been very

rapid in the last few years. The Services Sector contributes the most to the Indian GDP. The Growth Rate of the Services Sector in India GDP has risen due to several reasons and it has also given a major boost to the Indian economy. Indian Economy India gross domestic product GDP! means the total value of all the services and goods that are manufactured within the territory of the nation during the specified period of time. The Indian economy is the second fastest major growing economy in the whole world with the growing rate of the GDP at ".#$ in %&&'( %&&). The economy of India is the twelfth biggest in the world for it has the GDP of *S+ ,.&" trillion in %&&). Services Sector in India India ran-s fifteenth in the services output and it provides employment to around %.$ of the total wor-force in the country. The various sectors under the Services Sector in India are construction/ trade/ hotels / transport/ restaurant/ communication and storage/ social and personal services/ community/ insurance/ financing/ business services/ and real estate. Services Sector contri !tion to the Indian Economy" The Services Sector contributes the most to the Indian GDP. The Sector of Services in India has the biggest share in the country0s GDP for it accounts for around 1..2$ in %&&1. The contribution of the Services Sector in India GDP has increased a lot in the last few years. The Services Sector contributed only ,1$ to the Indian GDP in ,"1&. 3urther the Indian Services Sector0s share in the country0s GDP has increased from #..'"1 in ,""&( ,"", to around 1,.,'$ in ,""2( ,""". This shows that the Services Sector in India accounts for over half of the country0s GDP. The Reasons #or the $rowth o# the Services Sector contri !tion to the India GDP The contribution of the Services Sector has increased very rapidly in the India GDP for many foreign consumers have shown interest in the country0s service e4ports. This is due to the fact that India has a large pool of highly s-illed/ low cost/ and educated wor-ers in the country. This has made sure that the services that are available in the country are of the best 5uality. The foreign companies seeing this have started outsourcing their wor- to India specially in the area of business services which includes business process outsourcing and information technology services. This has given a major boost to the Services Sector in India/ which in its turn has made the sector contribute more to the India GDP. The Services Sector in India m!st e $iven oost Services Sector Growth Rate in India GDP registered a significant growth over the past few years. The Indian government must ta-e steps in order to ensure that Services Sector Growth Rate in India GDP continues to rise. 3or this will ensure the growth and prosperity of the country0s economy. The current situation in India is that the growth rate of services has overta-en both agriculture and industry and is now more than 1&$ of GDP. The services sector has the highest growth rate and is the least volatile sector. Growth is particularly mar-ed in public services/ IT and financial services. In some areas the growth rate of the services sector is #&(1&$ due to increased use of mobile technologies. India therefore has a services(oriented economy. It hasn6t followed traditional growth models as in 7hina! in that it has s-ipped the manufacturing stage and has jumped straight from the agricultural stage to services. Growth in the services sector will support growth in the agricultural and industrial sectors/ although growth in manufacturing/ which causes pollution is not so desirable in terms of job creation and increased prosperity. 8s India6s population grows so too does the number of dependents in the lower and higher age groups. 3or the economy to grow it has to invest. 7urrently the public sector invests more than it saves. The household sector saves in surplus/ but this is not increasing so it cannot continue to support private and public sectors. There is a massive need to spend on health and education/ particularly the education of women/ in order to reduce the birth rate. In South India the number of women in the population outnumbers men/ so the development of the south of India will depend on the education of women.

In the ne4t two decades a 9growth window6 for India which may not come again because the wor-ing population to total population ratio increases up to mid %&.&s! it will be important for India to absorb the growing labour force if the services sector is to play an important role. India is in a strong position to do this since it has a history of using :nglish for communication/ which in turn supports global trade and finance. ;nly the services sector can have a major impact on poverty. Improvements in agriculture are not having an effect on poverty. To address poverty there is a need to move people from bad sectors to good sectors or from unemployment to employment. This is happening with growth in human s-ills intensive sectors such as hotels / restaurants and IT/ but there are geographical/ labour unions and human s-ills restrictions on labour movement.

Indian Services Sector: Brief Overview India0s services sector contributes to about '& per cent of the country6s gross domestic product GDP!/ .1 per cent of employment/ a 5uarter of the total trade/ and over half of the foreign investment inflows. The services industry is one of the largest and fastest(growing sectors in the global mar-et. Its contribution to the Indian economy is particularly significant/ with regard to employment potential and impact on national income. This sector covers a wide range of activities/ such as transportation/ communication/ trading/ finances/ real estate and health/ among others. The services industry provides massive business prospects to investors. <ithout the sector6s capacity to generate revenue/ it would be difficult for the Indian economy to ac5uire the healthy place it currently enjoys on the global platform. Key Statistics The services sector received foreign direct investment 3DI! e5uity inflows worth Rs ,)"/,1&.#" crore *S+ %2.)2 billion! in the period 8pril %&&&=8ugust %&,./ according to Department of Industrial Policy and Promotion DIPP!. 8bout 2& per cent of India0s total e4ports are dominated by high(s-illed services/ such as software business services/ financial services and communication services. The e4penditure of Indian ban-ing and securities companies on IT products and services is e4pected to be around *S+ #%% billion in %&,./ a ,. per cent increase from %&,%. Recent Investments/ Developments 3or the fourth consecutive year/ <ipro has been ran-ed as the number one organi>ation in the global R?D service provider survey conducted by leading management and advisory firm/ @innov Aanagement 7onsulting. The survey was based on companies belonging to the following seven industriesB telecommunications/ semiconductors/ computing peripherals and storage/ consumer electronics/ automotive/ enterprise software/ and consumer software. Ar Au-esh 8mbani(controlled Reliance Industries Ctd RIC! is loo-ing to open an e4clusive chic-en restaurant chain in India in collaboration with % Sisters 3ood Group %S3G!/ a *D(based company. RIC sees potential in the 5uic- service restaurant ESR! industry/ which is projected to grow at .& per cent annually. The chain/ which will be -nown as 7hic-en 7ame 3irst 773!/ will directly compete in India with the world0s most popular chic-en restaurant chain/ Dentuc-y 3ried 7hic-en D37!. Fardcastle Restaurants Pvt Ctd FRPC!/ the master franchisee of the operations of AcDonald6s restaurants in west and south India/ is bringing its coffee retail format Ac7afG to the country. Ac7afG will be launched within the e4isting AcDonald6s restaurants/ with the first opening slated to be at So Ho 7entral outlet in Aumbai. ;ver ,1& Ac7afGs are e4pected to be set up over the ne4t five years. Investment of Rs ..1 million *S+ 1'/%.#! is allocated for each Ac7afG format. Tech Aahindra Ctd has bagged an outsourcing deal from 8ustralian financial services firm/ Perpetual/ to deliver registry services. 8s part of the deal/ the Indian company will give technology support for various superannuation and pension products of Perpetual. I<e are loo-ing to see a complete refresh of registry IT infrastructure and applications which will allow us to focus on our core strengths/J said Paul Statham/ acting Group :4ecutive of Perpetual Investments. The arrangement is believed to be a multi(million dollar deal. 8lvare> ? Aarsal 8?A!/ a global professional services organisation focusing on performance improvement and turnaround management/ is see-ing to e4pand its business in the country with the inception of a dedicated transaction advisory practice. Government Initiatives The government will set up a joint tas- force together with the services industry to prepare an action plan for the development of the services sector and increase services e4ports/ according to 7ommerce and Industry Ainister/ Ar 8nand Sharma. The majority of services sector e4ports are from verticals such as IT/ IT:S and HP; sectors. Fowever/ there is a wide scope for segments such as animation/ legal servicing/ architecture/ media and entertainment/ healthcare/ and tourism/ among others.

*nion 3inance Ainister P. 7hidambaram on %) 3ebruary presented the :conomic Survey %&,%(,. in the Co- Sabha of the Parliament. :conomic Survey is presented every year/ just before the *nion Hudget. It is a flagship annual document of the Ainistry of 3inance/ Government of India. Ind!stria% Sector 8fter recovering to a growth of ".% percent in %&&"(,& and %&,&(,,/ growth of value added in industrial sector/ comprising manufacturing/ mining/ electricity and construction sectors/ slowed to ..1 percent in %&,,(,% and to .., percent in %&,%(,.. The manufacturing sector/ the most dominant sector within industry/ also witnessed a decline in growth to %.) percent in %&,,(,% and ,." percent in %&,%(,. compared to ,,.. percent and ".) percent in %&&"(,& and %&,&(,,/ respectively. The growth in electricity sector in %&,%(,. has also moderated. The growth of the mining sector in %&,%( ,. is estimated at &.# percent/ though it showed an improvement over a negative growth of &.'. percent recorded in %&,,(,%. India is one of the top ten manufacturing countries though its share in total manufacturing value added AK8! is only about ,.2 percent. The growth rate of world AK8 had declined from 1.# percent in 3irst 5uarter of %&,,(,% to %.% percent in second 5uarter of %&,%(,.. The latest competitive industrial performance inde4 7IP! compiled by the *nited Lations Industrial Development ;rgani>ation *LID;!/ ran-s India #%nd out of ,,2 countries the same as in %&&1. The initiatives ta-en for boosting the manufacturing sector included Lational Aanufacturing Policy LAP!/ DAI7 Project/ 3DI Policy initiatives and setting up of the e(Hi> Project to promote ease of doing business. Services Sector The 7entre for Aonitoring Indian :conomy6s 7AI:! analysis of the sector(wise performance of services activities based on firm(level data show that the performance of sectors such as transport logistics/ aviation and construction in the year %&,%(,. is subdued in comparison to with the previous year. Figh negative P8T profit after ta4! in hotel sector continued. The health services and telecom sectors were projected to have rebounded in the year %&,%(,.. ;verall the year %&,.(,# is projected to be better for most of the sectors/ e4cept retail trading/ which is projected to have negative growth in profitability. 3DI in multibrand retail trading has been permitted subject to specified conditions. The IT and ITeS sector has started facing competition from many developing countries. <hile the :* has the highest share in computer and information services e4ports/ followed by India and the *S8/ many new competitors li-e 7hina/ Israel and the Philippines have emerged in recent years. Hetween %&&1 and %&,,/ the annual average growth of computer services was '" percent in the Philippines/ %2 percent in Sri Can-a/ 1" percent in *-raine/ %) percent in the Russian 3ederation/ .) percent in 8rgentina and .1 percent in 7osta Rica. ;ne major issue in services is the domestic barriers and regulations. Domestic regulations in strict <T; terms include licensing re5uirements/ licensing procedures/ 5ualification re5uirements/ 5ualification procedures/ and technical standards but here other restrictions and barriers are also considered. 8n indicative list of some important domestic regulations in India which need to be e4amined for suitable policy reforms in the services sector include Trade and Transport services/ 7onstruction/ 8ccountancy services/ Cegal services and :ducation Services.