Growth and Contribution of the Tertiary Sector in India

Since the decades following Independence, and especially since the economic liberalisation reforms begun in 1991, India's tertiary sector has grown faster than either agriculture or industry, and its share in the country's Gross Value Added (GVA) has risen steadily. In recent years services have come to account for well over half of India's GVA — easily the single largest of the three sectors — a striking change from the early decades of planning, when agriculture and industry together dominated national output. Because exact shares change from year to year and are reported differently across data sources, students preparing for TS Inter II year Economics should describe this contribution in approximate, qualitative terms — 'services now contribute more than half of national output' — rather than quoting a single precise figure as if it were fixed for all time.

Employment has followed a similar direction but at a noticeably slower pace. The share of the workforce employed in services has been rising for decades, but it still remains well below the sector's share of GVA, while agriculture continues to employ a comparatively large share of workers relative to what it contributes to output. This gap tells us something important: many high-value services — software, finance, professional consulting — are relatively skill- and capital-intensive and therefore do not employ very large numbers of people directly, while some employment-heavy branches of services, such as small retail trade or personal services, remain low-productivity and largely informal.