Traditional Belief is that As an Economy grows, share of Agriculture Declines and The share of Industry increases significantly with a modest rise in services.after this stage is fully entrenched , only later does a transition to the services takes place(KUZNETS and Chenery Research during 1950s- 60s)
Indian Experience is an outlier. Services and Industry both grew almost equally till the late 80s.Since then, Services has taken off and industry share has remained constant. This has created a Situation of IDEOSYNCRATIC growth Where we are still poor, but a tertiarised economy.Due to the skill intensive nature of services india is at the same time a Negative Outlier in terms of Employment in Services
Further, Growth leaders in service sector have been Modern services – Business Services ( 20%), Communication, Financial Services. Software service exports accounted for about 50 % of exports in 2011.
Due to rigid labor laws, land acquisition laws, higer cost of tax compliance, Lower growth in Indian Infrastructure sector in the 90s, low ease of doing business growth of private sector in industry remained limited. Thus share of industries remain same in nation income.
On other hand service sector is less labor and land intensive sector thus growth of this sector increased significantly (Reduces compliance cost for labor laws). At the same time USA was seeing boom in IT sector. Combine it with LPG reforms, service sector got opportunities to exploit its competitiveness to increase export.
