Explore India’s GDP by service sector. Learn the key facts and trends in this comprehensive guide. India’s resplendent service industry stands as a formidable testament to the superiority of contemporary economic growth paradigms over archaic ones. (The Ascendance of India’s Service Industry in Modern Economic Growth .(The Meteoric Rise of India’s Service Sector: Key Factors and Growth Trajectory.Surging Growth in India’s Healthcare Sector: Factors and Demographics.India’s Booming Tourism and Financial Sectors: Driving Growth in the Service Industry.Diverse Service Sectors in India)
India’s service sector, the fastest-growing globally, has burgeoned to contribute over 50% to the nation’s GDP.
The sector exhibited a remarkable surge of 10.8% in the first half of 2021–22, and preliminary estimates prophesy 9.1% gross value added (GVA) growth in the service sector for FY23.
Distinctively, India’s journey towards economic growth has deviated from the conventional shift from agriculture to industrialization, instead pivoting towards an ascent in the service domain.
This surge has precipitated the emergence of diverse industries encompassing IT, healthcare, tourism, transportation, and finance.
The Meteoric Rise of India’s GDP by Service Sector: Key Factors and Growth Trajectory
The meteoric rise of India’s service sector derives its vigor from several pivotal factors, notably the burgeoning cadre of educated and adept professionals, the burgeoning middle-class populace, and the dawn of the digital economy era.
Foremost among these is the IT and IT-enabled services (ITeS) sector which wielding substantial influence within the Indian service landscape.
With revenues surging to a staggering 3.1 trillion, it has achieved an impressive growth rate ranging between 13-15% across its triumvirate segments: customer relationship management (CRM), knowledge services, and transactional services.
The fiscal year of 2023 augurs well for the sector, bolstered by organizations’ unwavering focus on digital transformation to amplify the customer experience. Furthermore, the amalgamation of emerging technologies into diverse business verticals promises enhanced value delivery.
These dynamic forces have propelled India’s service sector onto the world stage and lured numerous multinational conglomerates to set up shop on the subcontinent due to the country’s plentiful skilled workforce, welcoming business environment, and efficient operational dynamics.
Surging Growth in India’s Healthcare Sector: Factors and Demographics
Likewise, the healthcare domain in India has experienced an impressive crescendo, with a substantial 10.6% contribution to the labor force in the fourth quarter of 2021. Notably, the female contingent constitutes a significant 52% of the workforce in this sector. The upswing in India’s healthcare sector can be attributed to surging demand for high-quality medical services, the burgeoning middle-class demographic, and the burgeoning trend of medical tourism.
India’s Booming Tourism and Financial Sectors: Driving Growth in the Service Industry
Another integral cog in the service sector is the burgeoning tourism industry. India’s rich cultural tapestry and its numerous tourist hotspots beckon millions of globetrotters annually.
By 2023, India is anticipated to secure the third spot, following China and the USA, in total travel and tourism contributions to the global GDP, amounting to a staggering US$ 457.1 billion.
The Indian government has introduced an array of initiatives to stimulate tourism, such as “Dekho Apna Desh“ in 2020, the introduction of e-tourist and e-medical visas, the promotion of destinations through the “Incredible India” campaign, and organizing roadshows to showcase travel destinations and various indigenous handicrafts.
Additionally, the finance sector plays a pivotal role in fostering the growth of India’s service industry. The advent of digital banking and governmental initiatives have been instrumental in promoting financial inclusion across the nation.
Diverse Service Sectors in India
India, a nation in the throes of rapid development, boasts a multifaceted and dynamic economy. Its flourishing service sector significantly bolsters the nation’s GDP.
Characterized by a panoply of industries catering to individuals, businesses, and the government, these sectors serve as linchpins in India’s growth narrative, offering gainful employment to millions. Below, we delve into some key service sectors poised for substantial future expansion.
- IT-BPM: The IT-BPM sector brims with potential, primed to achieve annual growth rates between 10-15%. The IT and fintech segments contribute over US$ 155 billion annually to the economy. The long-term trajectory necessitates substantial upskilling, transitioning from a low-cost, low-value-added service provider to a high-value-added partner. Anticipated growth in the IT and business services market is set at a commendable CAGR of 8.3% between 2021-26, culminating in a valuation of US$ 20.5 billion by 2026. The sector has the capacity to harness its skillsets to furnish a gamut of fintech solutions to the global financial clientele, including financial risk management services, insurance, natural disaster modeling, and underwriting.
- Healthcare: Presently, the healthcare industry’s contribution exceeds US$ 110 billion, poised to reach US$ 280 billion by 2020. This sector accounted for 10.6% of total employment across various industries during 2021-22, underscoring its robust growth at a 16% CAGR. Public and private healthcare expenditures collectively amount to 4% of GDP. The government has instituted initiatives such as “Ayushman Bharat Pradhan Mantri Jan Arogya Yojana” (AB PM-JAY) to safeguard against catastrophic health expenditure, thereby averting millions from falling into poverty annually due to medical costs.
- Tourism: This sector holds a prominent position as one of the largest employers of the female workforce. By 2028, it is predicted to contribute US$ 512 billion to India’s GDP and add approximately 53 million jobs by 2029. Elevating the customer experience remains pivotal in augmenting revenues and nurturing these industries. Government initiatives such as e-Visas, infrastructure enhancement, safety measures, and improved connectivity are pivotal in spurring the growth of India’s tourism sector.
- Space Sector: India’s prowess in space services presents a formidable advantage over global counterparts, thanks to its demonstrated proficiency in diverse launch technologies. Public-private collaboration augments capital inflow and fortifies competencies in the space domain, potentially capturing 9% of the global market share by 2030. EY projects the Indian space economy to burgeon to US$ 13 billion by 2025, at a CAGR of 6%.
- Financial Service Sector: Recognized as a pivotal service sector by governmental authorities, the financial services industry fosters the on-shoring of India-related financial services, a significant portion of which currently emanates from global financial hubs. This stimulates the export of financial services and high-skilled employment opportunities. The infusion of technology into financial services has been instrumental in propelling sectoral growth in India. India ranks among the world’s fastest-growing fintech markets, with more than 2,000 DPIIT-recognized fintech startups striving to make substantial contributions to the nation’s GDP. The fintech sector is poised to reach US$ 1 trillion in assets under management (AUM) and US$ 200 billion in revenue by 2023, with estimates of US$ 150 billion by 2025. India leads with an impressive fintech adoption rate of 87%, well above the world average of 64%. Government initiatives such as “Pradhan Mantri Jan Dhan Yojana” (PMJDY) in 2014 have significantly bolstered financial inclusion, ensuring universal access to banking facilities without minimum
Here are 5 frequently asked questions (FAQs):
- What is the significance of India’s GDP by service sector in its economy?
- India’s service sector is of paramount importance, contributing over 50% to the country’s GDP. It plays a pivotal role in shaping the nation’s economic landscape and employment opportunities.
- How does India’s GDP by service sector differ from other countries’ economic growth models?
- Unlike many countries that transitioned from agriculture to industrialization, India has shifted from agriculture directly to the service sector, a unique trajectory that has spurred its rapid growth.
- What are the key drivers behind the remarkable growth of India’s service sector?
- Several factors contribute to the sector’s growth, including a growing pool of educated and skilled workers, a burgeoning middle-class population, and the rise of the digital economy.
- Which industries within the service sector are making significant contributions to India’s economy?
- Notably, the IT and IT-enabled services (ITeS) industry, healthcare sector, tourism industry, and finance industry are among the major contributors, each with its own distinct impact on economic growth.
- What initiatives has the Indian government undertaken to promote tourism in the country?
- The government has introduced various initiatives such as “Dekho Apna Desh,” e-tourist and e-medical visas, and promotional campaigns like “Incredible India.” Additionally, roadshows are organized to showcase travel destinations and indigenous products, all aimed at boosting tourism.