Topic: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment
Q5. Examine the role of the services sector in sustaining India’s economic growth in recent years. Evaluate the major structural challenges affecting long-term expansion of the sector. Suggest measures to improve resilience and competitiveness in the sector. (15 M)
Difficulty Level: Medium
Reference: TH
Why the question
Recent PMI data showing strong services sector expansion despite global uncertainty has highlighted the critical role of services in sustaining India’s economic growth and resilience.
Key Demand of the question
The question requires examining how the services sector contributes to India’s economic growth, evaluating the structural bottlenecks limiting its long-term expansion, and suggesting measures to improve competitiveness and resilience of the sector.
Structure of the Answer:
Introduction
Briefly highlight the dominance of the services sector in India’s GDP, exports and urban employment along with its growing importance in the digital economy.
Body
- Role of services sector in economic growth: Mention contribution to GDP, exports, employment, digitalisation, domestic demand and economic resilience.
- Structural challenges affecting long-term expansion: Discuss informality, skill gaps, regional imbalance, infrastructure bottlenecks, global vulnerability and rising operational costs.
- Measures to improve resilience and competitiveness: Suggest skilling, infrastructure development, formalisation, innovation, regional diversification and export-market expansion.
Conclusion
Emphasise that sustainable services-led growth requires stronger productivity, technological depth and balanced integration with manufacturing and employment generation.
