Given the magnitude of services growth and its inter-linkages with other sectors of the economy, it is important to understand the impact of services sector on other macro-economic variables. The present paper attempts to identify some of the critical issues in India’s services-led growth and tests certain hypotheses that are currently in debate. These relate to: (a) whether the robust growth of the services sector has added a dimension of stability to India's GDP growth; (b) whether there has been a growing complementarity between services and industrial sectors of the economy; (c) whether like other commodity-producing sectors, the services sector also experienced 'jobless' growth; (d) whether the imposition of services tax has boosted the Indian Government’s efforts at mobilising more resources; and (e) whether high growth of services sector in India had an inflationary impact on the economy. Our analysis found the first four hypotheses to hold true. In respect of the last hypothesis, in contrast to the expectations that high services sector growth has an inflationary impact on the economy, we found that the rising share of services sector in GDP has not contributed to inflation in the Indian economy.
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number
10034.
Length: Date of creation: 2006 Date of revision:
2007 Publication status: Published in The Journal of Income and Wealth No.1; January-June 2006.Volume 28(2007): pp. 47-62 Handle: RePEc:pra:mprapa:10034
Find related papers by JEL classification: E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution E23 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Production O14 - Economic Development, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Piyabha Kongsamut & Sergio Rebelo & Danyang Xie, 1997.
"Beyond Balanced Growth,"
NBER Working Papers
6159, National Bureau of Economic Research, Inc.
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