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Tertiary Sector of Indian Economy

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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.

Service sector

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 sectors.

Insurance sector


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.

Private Insurance companies like ICICI, Max Newyork, Bajaj allianz, Kotak Mahindra, Metlife are providing life insurance, general insurance, medical insurance also.
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