Growth of service sector in India

by santosh R.N.S.I.T coll

by santosh R.N.S.I.T coll

Definition
qThe segment of the economy that provides services to its consumers. This includes a wide range of businesses including financial institutions, schools, transports and restaurants. Also known as "tertiary sector of industry," or "service industry/sector".

by santosh R.N.S.I.T coll

The various sectors that combine together to constitute service industry are:
q Trade q Hotels and Restaurants q Railways q Other Transport & Storage q Communication (Post, Telecom) q Banking q Insurance q Dwellings, Real Estate q Business Services q Public Administration; Defense q Personal Services q Community Services q Other Services

by santosh R.N.S.I.T coll

Over view of service sector
qService Sector in India today accounts for more than half of India's GDP. qAccording to data for the financial year 2006-2007, the share of services, industry, and agriculture in India's GDP is 55.1 per cent, 26.4 per cent, and 18.5 per cent respectively

by santosh R.N.S.I.T coll

Growth of service sector under five-year plan

qFirst-five year plan(1951-56) § The total plan of budget was 206.8 billion § Among the total plan transportation and communication had got allocated to 24% i.e., 49.7 billion and social services accounted for 16.64% 33 billion

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qAt the end of the plan period in 1956, five Indian Institutes of Technology (IITs) were started as major technical institutions.

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Second-five year plan(1956-61)
qThe second five-year plan focused on industry, especially heavy industry. Domestic production of industrial products was encouraged, particularly in the development of the public sector . qTransport and communication was given 23.6% of total budget(430 billion)

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Objectives of second year plan
qa sizeable increase in national income so as to raise the level of living in the country; qrapid industrialization with particular emphasis on the development of basic and heavy industries; qa large expansion of employment opportunities; and qreduction of inequalities in income and wealth and a more even distribution

by santosh R.N.S.I.T coll

Third-five year plan(1961-1966)
qThe third plan stressed on agriculture qAgain there was more emphasize was given only on transportation in service sector which accounted to 21%.

by santosh R.N.S.I.T coll

Fourth-five year plan(1969-74)
qA total outlay of Rs. 24,882 crores is envisaged for the Fourth Plan. of the aggregate outlay, Rs. 15,902 crores is in respect of the public sector Plan and Rs, 8,980 crores for the private sector. qIn service sector 14 major banks were nationalized

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Fifth-five year plan(1974-79)
qStress was laid on employment, poverty alleviation, and justice. The plan also focused on self-reliance in agricultural production and defense

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Sixth-five year plan(1980-85)
qCalled the Janata government plan, the sixth plan marked a reversal of the Nehruvian model. qWhen Rajiv Gandhi was elected as the prime minister, the young prime minister aimed for rapid industrial development, especially in the area of information technology. Progress was slow, however, partly because of caution on the part of labor and

by santosh R.N.S.I.T coll

Sixth-five year plan(1980-85)
qTourism also expanded. qThe sixth plan also marked the beginning of economic liberalization qTransport 12411.97 crores qCommunications and information and broadcasting 3124.67 qSocial services 14035.26

by santosh R.N.S.I.T coll

Outcomes of sixth-year plan
qThe production of Computer Numerically Controlled (CNC) machine tools. qThe commissioning of the first electronic telecom exchange and the running of trains with trailing loads of 3000 tonnes.

by santosh R.N.S.I.T coll

Seventh-five year plan(1985-89)
qThe plan lay stress on improving the productivity level of industries by up gradation of technology. qCommunication, Information and broadcasting 647.2 billion qPosts 29.5 billion qTelecommunications 453.8 billion qEducation, culture and sports 638.3 billion qHealth including medical 339.3 billion

by santosh R.N.S.I.T coll

Perio d b etw ee n 1989-9 1
q1989-91 was a period of political instability in India and hence no five year plan was implemented. Between 1990 and 1992, there were only Annual Plans

by santosh R.N.S.I.T coll

q In 1991, India faced a crisis in Foreign Exchange (Forex) reserves, thus the country took the risk of reforming the socialist economy. q P.V. Narasimha Rao also called Father of Indian Economic Reforms was the twelfth Prime Minister of the Republic of India had led one of the most important administrations in India's modern history overseeing a major economic transformation. q At that time Dr. Manmohan Singh launched India's free market reforms that brought the nearly bankrupt nation back from the edge. It was the beginning of privatization and

by santosh R.N.S.I.T coll

Eighth-five year plan(1992-97)
qThis plan can be termed as Rao and Manmohan model of Economic development qTransport 879.10 billion qCommunication 2600 billion

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qFinancial services 10.21% qTrade 9.06% qCommunication 14.31% qOther services 6.22%

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Ninth-five year plan(1997-2002)
qTotal outlay was 85920 billion qTransport 12132 billion 14.1 % qCommunication 4761 billion 5.5 %

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qFinancial services 8.93% qTrade 5.86% qCommunication 17.14% qOther services 8.19%

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Contribu tion o f T ra vel a nd Touri sm to GD P and Em ploym ent

by santosh R.N.S.I.T coll

Tenth-five year plan(2002-07)
qThe projected resource allocation of tenth year plan was 15,92,300 crores qTransportation allocated 225977 crores qInformation Technology 5492 crores qPost 1350 crores qTélécommunications 86984 crores qTourism 2900 crores

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Tou ris m R ece ipts (in Billion US$)

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Gr owth Rat e ( Rea l) of F in an cial Ser vices (Ban king an d I nsur an ce)

by santosh R.N.S.I.T coll

Eleventh-five year plan(2007-2012)
qTransportation allocated 202045 qInformation Technology 11048 qPost 3536 qTélécommunications 80753 qTourism 4558

by santosh R.N.S.I.T coll

Mile stone in the growth of service sector
qThe emergence of India as one of the fastest growing economies in the world during the 1990s is attributable to the rapid growth of its services sector to a great extent. qThe sector has been experiencing doubledigit since 2004-05 importantly, a strong growth of 10 % in 2005-06 has been instrumental in providing an impetus to overall real sector activity in the economy and propelling it to record a sturdy growth

by santosh R.N.S.I.T coll

qKeynote reforms, initiated by the then Finance Minister Dr Manmohan Singh in 1991, provided the momentum for a major reduction of the role of the public sector in the economy, a degree of deregulation, and greater integration of India’s economy into international markets. India’s entrepreneurial spirit was unleashed.

by santosh R.N.S.I.T coll

qSubsequent to this, the sector has continued to exhibit vibrant growth (10.6 per cent) during the first quarter of 2006-07 over the corresponding period of the previous year, mainly propelled by growth in ‘trade, hotels, transport and communication’ (13.2 per cent) followed by ‘finance, insurance, real estate and business services’ (8.9 per cent)

by santosh R.N.S.I.T coll

qDue to the structural transformation of the Indian economy in the new millennium in favor of a service-dominated economy, the share of the services sector in the total GDP has increased notably from 49.8% in 2000-01 to 54% in 2005-06. qDuring the first quarter (April-June) 200607, the services sector has accounted for a share of 54.2% as compared to 53.3% in the comparable period during last year

by santosh R.N.S.I.T coll

Quar terly Esti mat es of P rod ucti on f or Maj or
Sub-sectors 2005-06 2006-07 2005-06 2004-05 2006-07 % change over 175025 154642

1. Trade, hotels, 138390 13.2 11.7 Transport and communication (26.7) (25.7) (24.9) 2. Financing, insurance, real estate and business services 91527 84021 77245 8.9 8.8 (14.0) (13.9) (13.9) 3. Community, social and personal services 88,771 82637 77009 7.4 7.3 (13.5) (13.7) (13.9) All Services (1+2+3) 355323 321300 292644 10.6

by santosh R.N.S.I.T coll

India 's Ne t R ecei pts from T ra vel on Ba lance of P ayme nts
Year Foreign Receipts Payments Net Receipts Arrivals Tourist

(in million US$) (million no) 2000-01 3497 2001-02 3137 2002-03 3312 2003-04 5037 2004-05 6495 2005-06 7789 2804 3014 3341 3602 5510 6421 693 123 -29 1435 985 1368 3.5 4.1 2.4 2.5 2.9 2.7

by santosh R.N.S.I.T coll

India n Ba nki ng I ndu st r y qBanking in India originated in the first decade of 18th century with The General Bank of India coming into existence in 1786. qBy the 1960s, the Indian banking industry has become an important tool to facilitate the development of the Indian economy. At the same time, it has emerged as a large employer, and a debate has ensued about the possibility to nationalize the banking

by santosh R.N.S.I.T coll

q During fourth year plan the then prime minister Indira Gandhi issued an ordinance and nationalized the 14 largest commercial banks. q In the early 1990s the then Narasimha Rao government embarked on a policy of liberalization and gave licenses to a small number of private banks, which came to be known as New Generation tech-savvy banks, which included banks such as UTI Bank(now re-named as Axis Bank) (the first of such new generation banks to be set up), ICICI

by santosh R.N.S.I.T coll

qThis move, along with the rapid growth in the economy of India, kick started the banking sector in India, which has seen rapid growth with strong contribution from all the three sectors of banks, namely, government banks, private banks and foreign banks.

by santosh R.N.S.I.T coll

qCurrently, India has 88 scheduled commercial banks (SCBs) q28 public sector banks q29 private banks qand 31 foreign banks. qThey have a combined network of over 53,000 branches and 17,000 ATMs. According to a report by ICRA Limited, a rating agency, the public sector banks hold over 75% of total assets of the banking industry, with the private and foreign banks holding 18.2% and 6.5%

by santosh R.N.S.I.T coll

IT AND IT-ENABLED SERVICES
q India’s success in the export of IT Software and Related Services over the past decade remains unparalleled. q Total export revenues earned by this sector have grown from US$ 7.7 billion in 2001–02 to US$ 31.3 billion in 2006–07, thus showing a near 32% compound growth rate. q India now accounts for 65% of the global market in offshore IT and 46% of the ITES q market. A majority of the Fortune 500 and Global q 2000 corporations are sourcing IT and ITES

by santosh R.N.S.I.T coll

qThe Banking and Financial Services, Communications and Media, Manufacturing (Consumer Durables/Automobile), Aviation, Hospitality, and Retail are some of the key verticals that primarily benefit from the ITES-BPO services in the domestic market in India.

by santosh R.N.S.I.T coll

Current gdp of sectors

by santosh R.N.S.I.T coll

conclusion
qNew Delhi, Feb 15 (IANS) India's service sector could see slower growth, said a Confederation of India Industry (CII) report released here Sunday. qAccording to CII, recent data on specific service sector activities gives a mixed picture - while there has been a sharp drop in indicators such as tourist arrivals or air freight and passenger movements, railway traffic and cellular subscriber growth have been holding up.

by santosh R.N.S.I.T coll

Thank you

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