- This is owing to the GCF in real estate, ownership of dwelling and professional services at 20.1%, though the share has fallen in the last two years, followed by trade and repair services (10.6%) and public administration and defence (10.6%) where there is improvement in shares.
- As per the old method of estimating GDP at factor cost (GDP at FC), the services sector accounting for 57% of GDP grew by 6.8% in 2013-14, marginally lower than in 2012-13. This is mainly due to a fall in the growth rate of the combined category of trade, hotels, and restaurants and transport, storage, and communications to 3.0% from 5.1% in 2012-13, and in spite of robust growth of financing, insurance, real estate, and business services at 12.9%. The somewhat differing results in services growth under the two methods are due to conceptual changes of GDP at FC to basic price and adoption of latest data sources.
- There was also drastic decline in services share under the new method. The major change took place in the share of trade, repair, hotels, and restaurants from 17.2% in 2012-13 using the old factor cost method to 11.3% using the new basic price method. This is because trade carried out by manufacturing companies has now been shifted to manufacturing from trade and the data on unorganized trade enterprises has been updated with the 2010-11 survey instead of the 1999-2000 survey. However, this sector’s growth was much higher using the new method than under the old method.
- As per the Advance Estimates (AE) in 2014-15, growth of the services sector accelerated further to 10.6% as compared to 9.1% in 2013-14. This is mainly due to growth acceleration in financial, real estate, and professional services to 13.7% from 7.9% and public administration, defence, and other services to 9.0% from 7.9% in the previous year.
- The services sector is the dominant sector in most states of India with a share of more than 40% in the gross state domestic product (GSDP) in 2013-14 except for Arunachal Pradesh and Sikkim.
- Chandigarh is at the top with a share of 88.4% followed by Delhi with 87.7%. The major services in most of the states with high share are trade, hotels, and restaurants followed by real estate, ownership of dwellings and business services. In 2013-14, Bihar had the highest services growth of 17.3% and Uttarkhand the lowest of 5.5%.
- However, during 2014-15 (April to November), the FDI inflows to services grew by 105.8% compared to 22.2% growth in overall FDI inflows.
- India’s share in global exports of commercial services increased to 3.2% in 2013 from 1.2% in 2000. Its ranking among the leading exporters in 2013 was sixth.
- Net services have been a major source of financing India’s trade deficit in recent years. Two recent developments in India’s exports sector are the rising foreign value added content and services value added content.
