Current Affairs-Indian Economic Survey-2012-13:India Has Highest Increase in Share of Services in GDP at 8.1%

India Has Highest Increase in Share of Services in GDP at 8.1%

A comparison of the services performance of the top 15 countries for the 11 year period from 2001 to 2011 shows that the increase in share of services in GDP is the highest for India with 8.1 percentage points. These 15 top countries include major developed countries alongwith Brazil, Russia, India and China. While China’s highest services compound annual growth rate (CAGR) stood at 11.1%, India’s very high CAGR of 9.2% was second highest and also accompanied by highest change in its share. This is a reflection of the fact that India’s growth has been powered mainly by the services sector. 

India’s services sector has emerged as a prominent sector in terms of its contribution to national and state incomes, trade flows, FDI inflows and employment. For more than a decade the sector has been pulling up the growth of Indian economy with great stability. The share of services in India’s GDP at factor cost (at current prices) increased from 33.3% (1950-1951) to 56.5% in 2012-13, as per advance estimates. Including construction, this would increase to 64.8%. With 18%, trade, hotels and restaurants are the largest contributors to GDP among the various sub sectors. This is followed by financing, insurance, real estate and business services with 16.6% share. Community, social, and personal services with 14% share stand in the third place. This is followed by construction at fourth place with 8.2% share. 

In 2011-12, although the growth of “trade” sub-sector decelerated to 6.5%, its share improved to 16.6%. The share of the sub-sector “transport by other means” was 5.4%, while its growth was 8.6%. Banking and insurance was the most dynamic sector in 2011-12 with growth of 13.2%. “Other services” had a share of 7.9% in 2010-11 and 2011-12. It grew at 6.5% in 2011-12.