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Understanding India’s Services Revolution

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Author Info

  • Poonam Gupta
  • James P. F. Gordon

Abstract

This paper analyzes the factors behind the recent growth of India's services sector. The high growth of services output in the 1990s was mostly due to the rapid expansion of communication, banking, business services (including the IT sector) and community services. While factors such as a high income elasticity of demand for services, increasing input usage of services by other sectors, and rising exports, were important in boosting services growth in the 1990s, supply side factors including reforms and technological advances also played significant roles. Going forward, the growth potential of Indian services exports is well known, but the paper also finds considerable scope for growth in the Indian service economy provided that deregulation continues. In addition, the paper shows that employment growth in the Indian services sector has been quite modest, thus underscoring the need for industry and agriculture to also grow rapidly.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 04/171.

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Length: 36
Date of creation: 01 Sep 2004
Date of revision:
Handle: RePEc:imf:imfwpa:04/171

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Related research

Keywords: Economic growth; Employment;

References

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  1. Sergio Rebelo & Piyabha Kongsamut & Danyang Xie, 2001. "Beyond Balanced Growth," IMF Working Papers 01/85, International Monetary Fund.
  2. Francois, Joseph & Reinert, Kenneth A, 1995. "The Role of Services in the Structure of Production and Trade: Stylized Facts from a Cross-Country Analysis," CEPR Discussion Papers 1228, C.E.P.R. Discussion Papers.
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