Chapter : 2. Sectors of the Indian Economy

Importance of the tertiary sector

Importance of the tertiary sector
Factors responsible for the growth of tertiary sector.
1. Basic Services :
In any country several services such as hospitals, schools, post and telegraph, police station, courts, insurance, defense, transport, banks etc are required. These can be considered as basic services. The government has to take responsibility for the provision of these services.
2. Development of means of transport and communication :
The development of agriculture and industry leads to the development of services such as transport communication, trade etc. All these come under tertiary sector.
3. More income more services :
The per capita income in our country is rising. As income level rises the people demands of people are also rising.
4. New services :
With modernisation and globalisation some new services based on information and communication technology have become important and essential.
5. Role of tertiary sector in the Indian economy :
(i) India in developing country. Since 1991 India has adopted new economic policy-Globalisation, Liberalisation, welcoming MNCs and Foreign investment. Due to change of economic policies tertiary sector is growing in India. Basic amenities like education, health care services related with Information Technology, ATM booths, call centres etc. provides employment to educated Indians.
(ii) The share of tertiary sectors in GDP is growing day by day. The rate of growth of tertiary sector with other sector in terms of GDP indicates clearly that share of tertiary sector in GDP (%) has increased greatly since last 30 years (from 1973 to 2003). In 1973 the share of tertiary sector in GDP was from 35 to 40%. It has increased in 2003 from 50 to 60%.
(iii) The share of tertiary sector in employment (%) has also increased in last 30 years. In 1973, share was nearly 10 to 15% but it has increased from 20 to 22% in 2003. Though tertiary sector is not playing the role of providing employment over expectation, the primary sector continues to be the largest employer even in the year 2000.
(iv) Tertiary services increase efficiency of people.
(v) They provide the countrymen necessary information and knowledge.
6. Reasons for increase in the service employment throughout the work :
(i) Rising per capita income in the developed countries has generated proportionately larger increase in the demand for many kinds of services specially health care, entertainment and transport.
(ii) The increasing value of time has led to more household functions being accomplished outside of home.
(iii) Medical services as a proportion of Gross National Product (GNP) in a year, have increased steadily in Europe, North America and Japan.
(iv) There is also demand for medical care from elderly people.
(v) There is demand for educational services at all levels with the increase in demand for literacy and computer skills at workplaces.

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