Service Sectors in India

The service sector includes activities that help in the development of the primary and secondary sectors. These activities do not produce good on their own but serve as an aid for the production process. Transport, banking, communication, storage, and trade are a few examples of service sector activities. It also includes essential services which may not directly help in the production of goods. Examples: Teachers, doctors, lawyers. Service Sectors play an important role in India.

Service Sectors in India

Trade, Hotels and Restaurants

  • Trade is classified as internal or international or foreign trade. Internal trade refers to the purchase and sale of goods and services within the boundaries of a country, whereas international trade refers to the import and export of goods and services from one country to another.
  • The development of industry took place because trade developed. Development of trade is important because it serves as a source of employment to many people. Trade is useful as it acts as a link between producers and consumers. Today, there is electronic trading or e-trading, i.e. buying and selling through the Internet.

Transport, Storage and Communication

Transport refers to movement from one place to another. Roadways, railways, waterways, and airways are the four important modes of transport. The importance of transport is as follows:

  • Transport helps in broadening the market for agricultural and industrial goods.
  • It enables the movement of goods and services which not only helps internal trade but also supports international trade.
  • It helps to promote the tourism industry which in turn helps to earn foreign exchange.
  • It has generated many employment opportunities in recent years.

The storage sector includes storage and cold storage facilities in both the private and public sectors. The communication sector includes postal and telecommunication services which are provided by both public and private sectors in India. These services contribute about 9% to the country’s GDP.

Banking Insurance, Real Estate and Business Services

Banking services are provided by various banking organizations such as the Reserve Bank of India and public sector commercial banks. The real estate service and business services are mainly provided by the private sector enterprises in India. These services contribute 16% to the country’s GDP.

Community, Social and Personal Services

Provisions of safe drinking water, sanitation, health, and education are the community and social services provided by the public sector organizations for the welfare of people. Personal services are the services of lawyers, engineers, doctors, and chartered accountants. These services contribute about 14% to the country’s GDP

Importance of the Service Sector in India

  • In a developing country like India, the government has to undertake the provision of various services such as health facilities, providing education, credit at cheap rates, police stations and municipal corporations, which are essential for the overall growth of the people and the country.
  • In the last few decades, the development of the primary and secondary sectors has resulted in the rise of several services which are required for the smooth functioning of these sectors such as banking, transport and insurance.
  • As country witnessed economic development in the last few decades, there has been a rise in the income of the people. Rise in income has resulted in the demand for various services such as private hospitals, schools and professional training institutes.
  • In India, The information technology and communication sector has seen a tremendous growth in the last twenty years. This has resulted in the growing importance of the service sector in India.
  • In India, Service Sectors directly support the primary and secondary sectors of the economy because the adequate infrastructural service is a precondition of rapid economic development.
  • Rural development essentially focuses on action for the development of areas that are lagging in the overall development of the village economy. Key areas in rural development through this sector:
    • Development of human resources such as education, health, and skill development
    • Development of the productive resources with technology
    • Infrastructural development such as transport facilities, electricity, marketing, and research
  • Hence, rural development is impossible without this sector in rural areas.

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