Page 40 - DMGT522_SERVICES MANAGEMENT

Unit 2: Emergence of the Services Economy

Notes
Figure 2.1: Growth Rate of GDP and Services Sector GDP

Source: Based on CSO data.
Note: @PE, *QE, **AE

The service sector growth rate at constant prices has always been above overall GDP growth
rate since 1996-97 except for 2003-04 when the two converged. Thus for the last 15 years, this
sector with growth much above overall GDP growth of the economy has been pushing up the
growth of the economy with a great amount of stability. The CAGR of the services sector at
10.2 per cent for the period 2004-05 to 2010-11 has been higher than the 8.6 per cent CAGR of
GDP during the same period, clearly indicating that the services sector has outgrown both the
industry and agriculture sectors. In the years 2009-10 and 2010-11, the services sector has
grown at 10.5 per cent and 9.3 per cent respectively. In 2011-12, the growth rate of services is
9.4 per cent (AE).

Did u know? Decline in foreign investment could affect the country’s Balance of Payment
situation and also impact the rupee.

2.4.2 State-wise Comparison of Services

A comparison of the share of services in the Gross State Domestic Product (GSDP) of different
states and union territories (UTs) in 2009-10 shows that the services sector is the dominant sector
in most states of India. States and UTs such as Tripura, Nagaland, West Bengal, Mizoram,
Maharashtra, Bihar, Tamil Nadu, Kerala, Delhi, and Chandigarh have higher than all-India
shares. Chandigarh with an 86 per cent share and Delhi with 81.8 per cent top the list. Other than
Chhattisgarh (34.8 per cent) and Himachal Pradesh (39.6 per cent), services in all other states
individually hold a share of more than 40 per cent in the GSDP. Thus the services revolution in
India seems to be becoming more broad-based, with even the hitherto backward states piggy-
backing on the good performance of this sector to go up the escalator of progress. The highest
growth rates of the services sector are in the north-eastern states of Arunachal Pradesh (34.9 per
cent) and Sikkim (30.1 per cent). Among the other states, Goa with 20.1 per cent and Bihar with
16.6 per cent growth top the list. This is over and above their very high growth rates in 2008-09.
Other states with higher than national average growth in the sector are Kerala, Tamil Nadu,
Maharashtra and Mizoram.

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