Growth of the service sector in India

India has a struggle with employability, which is a result of the manufacturing industry’s failure to employ enough labourers and the dearth of marketable skills among job searchers.

Agriculture and related professions make up the greatest portion of the primary sector, which accounts for the majority of the national income in underdeveloped nations.

When compared to the manufacturing sector, the Indian economy’s service sector grew quickly.

The service sector made up 53.89% of India’s overall gross value added (GVA) in the years 2020–21. Agriculture and allied sectors contributed 20.19% and 25.92%, respectively, to it in comparison to the industry sector. When we consider that 54.6% of India’s workforce is employed in agriculture, it is concerning that this sector contributes the least overall.

The benefits of this shift

The country has a lot of work prospects because of the information technology and communication sector. The economy as a whole benefit from efficient service delivery since it boosts both labor and capital productivity.

The creation and growth of new services like marketing, PR, and advertising in India strengthen ties with the rest of the economy while also providing vital service inputs to the country’s industrial and service sectors.

The rapid growth of knowledge-based services, including professional and technical services, is the area of the services market that is expanding at the highest rate. India has a significant edge in the provision of these services due to its established technological and educational infrastructure, as well as its cheaper labour costs.

The challenges of this shift

The declining trend in the manufacturing sector limits the service sector’s ability to expand.

Instead of being a part of a broader plan, service reforms in India have emerged randomly. A specific services sector may not be successful if it is not supported by improvements in other additional services because of the close ties between various services.

The manufacturing sector’s lack of growth restricts the growth in jobs of the labor force. These service sectors’ increased need for labour does not match the size of Indian population.

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