Services Now Contribute ₹55 of Every ₹100 to India’s Economy, 8 Points

Delhi

From Factories to Fintech: NITI Aayog’s Twin Reports Expose India’s 28.8% Industrial Stagnation vs Services Boom | NITI Aayog Reports Reveal India’s Services Surge: 54.5% of Gross Value Added (GVA) vs 28.8% for Industry (2024–25)

1. Twin Reports Released by NITI Aayog

• Launch Event:

  • Released by B.V.R. Subrahmanyam, CEO, NITI Aayog.

  • Attended by Dr. Arvind Virmani (Member, NITI Aayog) and Dr. V. Anantha Nageswaran (Chief Economic Adviser).

• Purpose:

  • First-ever dual assessment of India’s services sector from both output (GVA) and employment perspectives.

  • Focus on state-level and sectoral dynamics for policy insight.

2. Report 1: India’s Services Sector – GVA & State-Level Dynamics

• Contribution to Growth:

  • Services sector contributes ~55% of India’s GVA in FY 2024–25.

  • Industrial sector stagnates at 28.8%, highlighting structural imbalance.

• Key Findings:

  • Regional Balance Improving: Lagging states are catching up with advanced ones.

  • Inter-state disparities have widened only modestly.

  • Indicates broad-based and inclusive services-led transformation.

📊 Table: Sector-wise GVA Share Comparison

3. Manufacturing Stagnation: “Premature Deindustrialisation”

• Flat Growth:

  • Manufacturing GVA share stuck between 17–18.5% for over a decade.

  • 2021–22 peak: 18.5%, but dropped to 16.9% in 2022–23.

• Sectoral Weaknesses:

  • Construction declined marginally to 8.9% (2023–24).

  • Utilities barely improved, from 2.3% → 2.4%.

• Economic Concern:

  • India is facing ‘dual divergence’ — services surging, manufacturing stagnating.

  • Reflects ‘premature deindustrialisation’ at lower income levels.

4. Report 2: Employment Dynamics in the Services Sector

• Dual Nature of Employment:

  • High-productivity, global services (IT, finance, telecom) = low employment intensity.

  • Traditional services (trade, transport, personal care) = high employment, low pay, informal.

• Post-Pandemic Trends:

  • Services drive employment recovery, but job quality lags behind output growth.

  • Persistent gender, rural–urban, and regional disparities.

5. Financial & Employment Highlights

• Services’ GVA Share: 54.5% (FY 2024–25) — India’s top contributor.

• Industrial Sector Share: 28.8%, unchanged from 2011–12.

• Manufacturing Share: 17.5% (2023–24).

• Construction Share: 8.9% (2023–24).

• Employment Pattern: Services dominate urban and skilled jobs, but informality remains above 70% in traditional segments.

6. Key Policy Recommendations

(a) Sectoral Priorities

• Invest in digital infrastructure, logistics, innovation, and finance.

• Focus on skilling for future-ready service jobs.

(b) State-Level Strategies

• Develop region-specific service policies.

• Strengthen institutional capacity and urban service clusters.

• Integrate services with manufacturing ecosystems for balanced growth.

(c) Employment Roadmap

1. Formalisation & Social Protection:

   • Support gig workers, self-employed, and MSMEs.

2. Targeted Skilling:

   • Focus on women and rural youth.

3. Green Economy Skills:

   • Build capacity in sustainable and digital sectors.

4. Regional Service Hubs:

   • Promote growth in Tier-2 and Tier-3 cities.

7. Broader Economic Implications

• Services-led growth indicates spatial inclusion but risks employment imbalance.

• To sustain long-term dynamism, India must:

  • Strengthen manufacturing linkages.

  • Encourage innovation-led services.

  • Drive balanced industrial diversification.

8. Pathway to Viksit Bharat @2047

• Reports underline that a productive, formal, and inclusive services economy is key to achieving the Viksit Bharat 2047 vision.

• Collaboration among states, industry, and academia is crucial to unlocking the next growth wave.

Disclaimer (for The Profit India)

This article is based on data and insights from official NITI Aayog reports and publicly available government documents. The Profit India does not guarantee the accuracy of external data sources. The content is intended for informational purposes only and does not constitute investment, economic, or policy advice.

Read More

Services Sector Softens, Manufacturing Gains: India’s October PMI at 59.9, 10 Points

₹5532-Cr Electronics Boost: 7 New Projects, 5195 Jobs Coming Up! 7 Points

Indian Amazon Sellers Achieve $20 Billion Export Milestone! 6 Points

ChatGPT Go Worth ₹4788/Year Now FREE in India – Offer Starts Nov 4! 10 Points

Airbus Expands Make in India Manufacturing: 10K+ Jobs, €3.5B Impact, 9 Points