Learning from the Indian Experience
Edited by Tojo Thatchenkery and Roger R. Stough
Chapter 4: Recent Developments in India’s Service Economy and the Role of the Information Technology Industry
Cherian Samuel* Structural change in an economy is usually measured in terms of changes in the sectoral – primary (agriculture), secondary (industry), and tertiary (services) shares of output/value added/employment. From a purely mathematical viewpoint, the economic structure at any given time is dependent on initial conditions of sectoral shares and the growth rates between the initial and ﬁnal time periods. From this perspective, a study of structural change in an economy should ultimately focus on explaining the initial conditions and the subsequent sectoral growth rates. This chapter attempts to study recent structural changes in the Indian economy, with particular emphasis on the services sector. In turn, it also tries to identify the role of the information, communications and technology (ICT) industry in the recent growth of the Indian service economy. This chapter is divided into four parts: part one surveys the literature on structural changes in economies; part two presents the data analysis on structural change; part three looks at different aspects of the Indian information technology (IT) industry; and part IV concludes the study. I THE SERVICE ECONOMY For estimating the gross domestic product (GDP), the whole economy is usually partitioned into primary, secondary and tertiary sectors. These sectors are used interchangeably with agriculture, industry and services. The GDP estimates of the primary sector, that is agriculture, forestry and logging, ﬁshing and a part of the secondary sector, that is mining and quarrying, registered manufacturing and construction are based on the production approach. In the remaining part of the secondary...
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