Tertiary Sector of Indian Economy
The tertiary sector includes service industry and it holds the highest
importance among all sectors. The tertiary sector of economy involves
the provision of services to business as well as final consumers.
Services may involve the transport, distribution and sale of goods from
producer to consumers as may happen in wholesaling and retailing, or
may involve the provision of a service, such as in pest control or
entertainment. The tertiary sectors account for 51% of the GDP.
The tertiary sectors may include
insurance, bankin and transport. The
higher the productivity in primary and secondary sector and lower the
employment in these sectors, the better it is. People need more and
more services for leading qualitatively better lifestyle. They need
more means of transport, more communication and educational facilities,
more training, more medical facilities, entertainment, technical
facilities, banking facilities and so on.
Tertiary sector depends on
scientific research and innovative developments to increase
productivity and it provides engineering and construction consultancy
support services for all projects in all sectors. Developed countries
employ more than 80% the services sector.
India is the
fifteenth largest country in the world in terms of services' output.
This sector provides employment to 23% of the workforce and is the
fastest growing sector, with a growth rate of 7.5% in 1991–2000 up from
4.5% in 1951–80. It has the largest share in the GDP, accounting for
53.8% in 2005 up from 15% in 1950.
Business services like
information technology, information technology enabled services,
business process outsourcing contribute to one third of the total
output of services in 2000.
The growth in the IT sector is due
to the availability of a large pool of low cost and highly skilled,
educated and fluent English-speaking people. Foreign clients have also
expressed their interest in outsourcing much of their operations to
Indian excellent infrastructure in the service sector and the lowest
communication cost has helped India to be a dominant player in these
The concept of insurance dates long back to 1818. Life Insurance premium accounts for
2.5% of the nation’s GDP while general insurance contributes 0.65% of
India’s GDP. Government of India opened gate for private insurance
companies to enter the arena and FDI of 26% in the Insurance sector in
1999 until then only LIC provided insurance faculties.
Insurance companies like ICICI, Max Newyork, Bajaj allianz, Kotak
Mahindra, Metlife are providing life insurance, general insurance,
medical insurance also.