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Write the role of Business services in the Indian Economy.

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The services sector — including power, telecom and transport account for

60-65 per cent of the economy in most OECD (Organisation for Economic

Cooperation and Development) countries. While that may be surprising, even

developing countries have significant proportion of their GDP coming from

the services sector.

• Sustained, high and broad-based growth is essential for economic development

and poverty alleviation. What is needed for such growth is an increase in

investment in the economy. There are encouraging signs on both the growth

and investment fronts in recent years. India is the second largest country in

the world, measured by a population of purchasing power parity. It ranks

among the top 5 economies of the world and expects to become the third largest

economy in the world by 2025.

• As with any growing economy the sectoral composition of GDP has been

changing with the services showing an increased share of above 50 per cent

and that of agriculture declining to 25 per cent. The services sector continued

to be the mainstay of the expansion during 2003-04, contributing 57.6 per

cent to real GDP growth. Leading the upsurge was ‘trade, hotels, transport

and communication’. This was in consonance with the improved performance

of the commodity producing sectors. The strong expansion in cargo handled

at major ports as well as the rise in freight and passenger traffic of the railways

boosted the performance of the transport sector.

• According to the latest estimates, services account for about 63 per cent of

the world economy. Industry accounts for 32 per cent and agriculture just 5

per cent. Nearly 70 per cent of the labour force in developed economies is

employed in the services sector.