A striking aspect of India's recent growth has been the dynamism of its services sector. In 2010, it accounted for 57 percent of the country's GDP and 25 percent of its total employment. The results do not conform to the growth experience of currently industrialized countries or other developing economies. Is the increasing share of the service sector in India's total output simply notional, as several activities that were earlier classified in the industrial sector are now subsumed in services' value added, or because the relative price of services has increased over time? No. The sector's growth is real - it is linked to household final demand, policy reforms and increased service exports. Is this service-led growth process sustainable? That remains an open question because the service sector is highly heterogeneous, ranging from software services and business process outsourcing to wholesale and retail trade and personal services. These subsectors vary considerably in the context of different economic characteristics that are important for development.
Gaurav Nayyar is an Economist in the Economic Research Division of the World Trade Organization, Geneva, Switzerland. Previously, he was a College Lecturer at St Catherine's College, University of Oxford. He obtained a D.Phil. in Economics from the University of Oxford, where he was a Dorothy Hodgkin Scholar. Dr Nayyar's research interests lie primarily in the area of development economics, and he has published in academic journals on issues relating to the service sector, economic growth and poverty reduction. He was a co-author of the 2010 World Trade Report Trade on Natural Resources and the 2011 World Trade Report on Preferential Trade Agreements.
'Gaurav Nayyar's book is an invaluable resource for anyone interested in the services sector, especially its role in Indian economic development.' Timothy Besley, London School of Economics
'Gaurav Nayyar's book is a must-read for anyone trying to understand why India's service sector has grown so quickly and why India's development has not followed the classical path from primary to secondary and then to the tertiary sector. It's very well researched and raises as many questions as it answers - and more importantly disaggregates a black box in illuminating detail.' Ajay Chhibber, Assistant Secretary General, UNDP
'Services are the most dynamic sector in many economies including India's - where they account for half of GDP - yet they have received far less attention than industry or agriculture. This penetrating book fills an important gap by explaining the role that the service sector does and can play in economic development, both in India and more generally.' John Knight, University of Oxford
'I highly recommend this book as it makes an original and important contribution to the theory of structural change and economic development as well as to international economics. It will also have a significant impact on economic policy in the real world.' Ajit Singh, University of Cambridge
'Based on a study of the exceptional Indian experience, Gaurav Nayyar's book is a major work to advance our understanding of services-led growth with results that can be widely generalized. I highly recommend this book for its very lucid, insightful, and deep analysis of many interrelated developments, which have the potential to transform the socioeconomic profile of most developing countries in the coming years.' Harsha V. Singh, Deputy Director-General, World Trade Organization