Services Sector – Myths and Realities

Over the past few years, there has been a major debate in India on the relative importance of services sector vis-v-vis manufacturing and agriculture. Economists say services now account for nearly 50% of our GDP, and their growth at 8 to 10% per annum is outpacing both industry and agriculture. Some claim that the rise in service sector's GDP marks a structural shift in the Indian economy and takes it closer to the fundamentals of a developed economy.

Good governance is key to prosperity

The news on the economic front is somewhat disconcerting.  The last quarter growth rate has fallen to 3.8%.  What is worse, the revenues of Union government in the first quarter are   Rs.10, 000 crore below estimates and the fiscal deficit has risen significantly.  Two major credit rating agencies have down graded India’s creditworthiness. There are early days yet, and things could improve in the remaining fiscal year.  But news from manufacturing sector is not very happy either.  In fact, if services sector is excluded, there is stagnation in much of agriculture and industry.

Medieval Social Attitude and Modern Economy

The chief concern of an average urban middle-class housewife is her child’s admission to a prestigious private English medium school, or her inability to get cheap hired domestic help, preferably a child worker. Six years ago RK Laxman drew an insightful cartoon that depicts our society. Two boys – one healthy, standing erect in school uniform; the other weak, ill-clad and groaning under the weight of a load of books and lunch box with two ladies looking on. The mother of the uniformed child tells her companion, “It’s really cruel burdening the kids like this!

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