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.