Service
industry, an industry in that part of the economy
that creates services rather than tangible objects. It is also known as
tertiary sector. Economists divide all economic activity into two broad
categories, goods and services. Goods-producing industries are
agriculture, mining, manufacturing, and construction; each of them creates some kind of
tangible object. Service industries include everything else: banking,
communications, wholesale and retail trade, health & spa, airlines,
tourism, hotel management, all professional services such as engineering,
computer software development, and medicine, nonprofit economic activity, all
consumer services, and all government services, including defense and administration
of justice. A services-dominated economy is characteristic of developed
countries. In less-developed countries most people are employed in primary
activities such as agriculture and mining.
The services sector, with around 52 per cent
contribution to the Gross Domestic Product (GDP) in 2014-15, has made rapid
strides in the past decade and a half to emerge as the largest and one of the
fastest-growing sectors of the economy. The services sector is not only the
dominant sector in India’s GDP, but has also attracted significant foreign
investment flows, contributed significantly to exports as well as provided
large-scale employment. India’s services sector covers a wide variety of
activities such as trade, hotel and restaurants, transport, storage and
communication, financing, insurance, real estate, business services, community,
social and personal services, and services associated with construction.
The services sector
contributed US$ 783 billion to the 2014-15 GDP (at constant prices) growing at
Compound Annual Growth Rate (CAGR) of 9 per cent, faster than the overall GDP
CAGR of 6.2 per cent in the past four years.
Out of overall
services sector, the sub-sector comprising financial services, real estate and
professional services contributed US$ 305.8 billion or 20.5 per cent to the
GDP. The sub-sector of community, social and personal services contributed US$
188.2 billion or 12.6 per cent to the GDP. The third-largest sub-segment
comprising trade, repair services, hotels and restaurants contributed nearly
equal or US$ 187.9 billion or 12.5 per cent to the GDP, while growing the
fastest at 11.7 per cent CAGR over the period 2011-12 to 2014-15.
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