The need for cooperation among various service sectors has been an inherent component of development discourse. Partnership bridges the gap among the sectors. It also sets in motion a culture of ‘collaboration’ and ‘team spirit’. In an integrated economy, cooperation among the sectors does have a multiplier effect. As India has stepped up towards the services-led growth, so the service sector will be able to contribute to inclusive growth by enhancing investment, creating employment and human capital, developing infrastructure and lastly, by better cooperation & assimilation among themselves.
The service sector of India is not only the dominant sector in the country’s GDP but also has attracted significant foreign investment and has increased large-scale employment. India’s service sector covers a wide variety of activities that include trade, hotel and restaurants, transport, storage and communication, etc. The services sector plays a key role in India’s economic growth. Although, Indian economy is going through a very tough time at present. But it is expected that our economy will bounce back very soon. The service sector has been the growth engine after 1991 economic reforms known as LPG or the Liberalisation, Privatisation and Globalisation model. It contributes more than 50 per cent of India’s GDP.
The service sector currently contributes to almost 54% of Gross Value Added (GVA). In an Integrated economy, one service sector does have a multiplier effect and is linked with the other service sectors. For Example, tourism is linked with health as well as Leisure. Therefore, the cooperation among the various service sectors is needed for development.
All these sectors need to work in collaboration to ensure comprehensive development and overcome the limitations of individual sectors. Bridging the gap is necessary for the Developmental process, community participation in the developmental processes, effective and efficient governance, effective delivery of public services, public interest and national interest.
The Cooperation Among Various Service Sectors Boosts India’s development process in the following ways:
The share of the service sector in the generation of employment is increasing steadily. It could contribute more towards the generation of employment if the service sector collaborates more.
Example- The Bharatmala project not only provides connectivity through better transportation services but also creates employment in the construction sector thereby promoting tourism in remote areas.
Increase Export Prospects:
India is moving towards a service-led export growth in recent years. The services sector is largely responsible for the growth of Indian economy. Before the economic reforms of 1991, the services sector has a very low share in the Indian economy. But the post-1991 economic reforms, it claims its large share in the GDP. The service sector majorly contributes to the exports of service from India.
India’s share in world exports has increased significantly in recent years. India has increased its share in the world export from 0.6% in 1991 to 1.7% in 2018. But the current scenario of the world has plunged the growth of the economy of the world. Not only India but even the world has had a difficult time this year. India’s export is recovering, but they are doing so at a very slow pace.
The services sector contributes to human development in our country. The services sector has been rendering some valuable services, such as health services, educational facilities, IT and IT-enabled services (ITes), skill development, health tourism, sports and cultural services etc., which are largely responsible for human empowerment and improvement of quality of life of the people in general.
As a new trend emerges, industries have to upgrade their techniques and methods. With new technological solutions, the process of production became faster and efficient. The technology adopted from foreign sources was able to penetrate into domestic firms too, leading to rapid development.
Ex: Li-Ion battery developed by ISRO is being used by the automobile sector through technological transfer. This will allow the development of electrical cars.
Service sector growth is linked to inflows of FDI in the Indian Economy. Robust growth in services leads to higher inflows of FDI. Not only services but computer software and hardware, trading, telecommunications, and hotel & tourism were the top five sectors for FDI. In figure, services garnered FDI worth $7.85 billion while investments in computer software and hardware were $7.67 billion. Trading drew $4.57 billion, telecommunications were $4.44 billion in FY20, and hotel & tourism attracted $2.93 billion of foreign inflows.
Contribution Towards Development of Infrastructure and Communication Services:
Service Sector has also been playing an important role in developing, expanding and management of infrastructure with a special emphasis on the development of transportation and communication like India the importance of Development of infrastructural facilities is quite high.
For Example- UDAAN scheme to boost air connectivity not only promotes regional development but also leads to growth in housing and real estate sector, construction, building materials, tourism, etc.
Contribution Towards Growth of IT and ITes:
The service sector has also paved the way for the continuous growth of its IT and IT-enabled service sector and thereby helping the economy of the country to attain higher growth both in terms of GDP share, employment, exports etc. Also, Investment in higher education produces high quality IT professionals needed for the fast-growing IT services sector.
Initiatives like Start-up India giving a boost to start-ups in multiple domains like health care, inter-city cab services, online food delivery businesses, etc. So, it does not only cater to services but also provide employment.
Contribution Towards Development of Some Social Services:
Most of the poor in India do not have access to basic services such as healthcare and education, and infrastructure is weak so the cost of service delivery is high. If India needs to breach the gap between GDP growth and inclusive growth, then this cooperation is necessary. The services sector is also playing an important role in the expansion of some social services like sports, cultural services etc.
Hence, different sectors have functional inter-linkages and investment in one sector creates a multiplier effect benefitting the entire economy.
Thus, cooperation or partnership among various service sector leads to all-inclusive development and high economic growth. This way the country can achieve sustainable growth and inclusive development considering various challenges facing the India society and economy.
Related Updates on General Studies