question_answer 13)

What are the major factors responsible for the high growth of the service sector?

Answer:

The major contribution to GDP in India comes from the service sector which has grown impressively since liberalisation. The major factors responsible for the high growth of the service sector are as follows (i) Rise in Income Rise in per capita Income is an Indicator of increase in general affluence levels. With rise in income people start demanding services which .can make their lives more comfortable. (ii) Rise in Life Expectancy Health programmes have contributed significantly to increase in life expectancy. As a result services like old age homes, nursing homes, health care, insurance etc have registered growth. (iii) Working Women Increase in numbers of working women has led to an increase in demand for day care facilities for children, packed food, laundry services, etc. (iv) Complex and Busy Lifestyles As dally routines have got busier, individuals find it difficult to manage things on their own. Hence, people require services of tax consultants, legal advisors, investment advisors, etc to manage various tasks. (v) Product Complexity A large number of products such as air conditioners, water purifiers, computers etc have now become a part of urban life. These products need after-sales service, maintenance that can only be serviced by specialized persons. (vi) Cultural Changes The emergence of the nuclear family system in place of the traditional joint family system has created a demand for a host of services like education, health care, entertainment, telecommunication, transport, tourism and so on. (vii) IT Revolution IT became one of the key service businesses of the country. India has the largest software skilled population in the world. The domestic market as well as the international market has grown substantially. IT has given rise to PCO's, pager service providers, web shoppers, consultancy etc. (viii) Resource Scarcity and Competition Agriculture in India already employs around 60% of the population and industry did not grow much due to manufacturing being very expensive. Services required very less or sometimes no initial investment, duo lo which they were preferred over manufacturing by entrepreneurs. Manufacturing had largo investments and large names in business. Therefore, the best option for new companies was to come up with services since the competition levels were low in service sector. (ix) Development of Markets During the last few decades the markets in the country have become more developed. Urban India has become a cluster of wholesaling and retailing business. In the semi-urban and rural areas retail business is significantly present. A new breed of organizations, offering marketing services has come up (x) Globalisation and Outsourcing Globalisation has increased the demand for courier, shipping, travel and information services. India today is looked upon as a great location to outsource various business processes such as call centres, accounting services, etc. Many foreign consumers have shown interest in the country's service exports. This is due to the fact that India has a large pool of highly skilled, low cost, and educated workers in the country, Medical services in India have also grown due to this reason.