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ISSN No:-2456-2165
Abstract:-This paper makes an attempt to analyse how This paper attempts to analyse service sector in the
the service sector has been affected by COVID-19 on light of ongoing pandemic in India. The paper is divided
services sector in India. Though, the exact impact of into four sections. Section II deals with growth and structure
COVID-19 can be measured only after the situation of Services in India. Section III examines the effect of
normalises. However, there is no doubt in the fact that COVID-19 on Service sector in India and section IV gives
COVID-19 has affected the service sector severely than conclusion.
estimated or predicted. Apart from trade, hotels and
restaurant, insurance, transport, IT Telecommunication, II. GROWTH AND STRUCTURE OF SERVICES
and real estate other key sectors such as Oil and gas, IN INDIA, 1991-92 TO 2016-17
insurance, manufacturing, education etc. will be
impacted as consumers will restrict outdoor activities to Table I shows the relative contribution of different
essentials in the foreseeable future. economic sectors in GVA (%). It is observed from the table
that during the post-reform period from 1991-92 to 2016-17,
Keywords:- COVID-19, Service Sector and India. the relative contribution of agriculture sector continues to
fall from 35.38 per cent during the period 1991-92 till 1996-
I. INTRODUCTION 97 to 17.66 per cent during 2012-13 to 2016-17. However,
for the manufacturing sector the fall in its contribution to
The service-led growth of India during the post total GVA has been moderate. The services sector witnesses
liberalization period is now well documented. The consistent and substantial rise in its share in GVA.
implementation of reforms in the service sector has led to ‘Construction’, ‘trade, restaurant and hotels’ and ‘transport
high growth in industries such as telecom, information storage and communication’ account for more than two third
technology, financial services and real estate. Economic of the services sector GVA for the entire post reform period,
Survey, 2016-17 observes that “The services sector has i.e. from 1991 to 2016.
emerged as the most dynamic sector of the world economy,
contributing almost one-third of world gross value added, As can be further seen from Table -I, major changes in
half of world employment, one-fifth of global trade and the structure of the services GVA happened from 2003-04 to
more than half of the world foreign direct investment 2007-08. During this period, the services sector has
flows”. However, the growth of this sector has moderated to contributed to more than half of the GVA of the economy.
7.7 per cent in 2016-17 compared to 9.7 per cent achieved in ‘Trade, hotels and restaurants’ continue to be the largest
2015-16, but it continues to be higher than the other two contributor to services GVA by accounting for about 21.19
sectors, namely, agriculture and manufacturing. Today, per cent of the services GVA. The sub-period from 2008-09
economic growth in all the states is led by the service sector. to 2011-12 appears to be the most vibrant and high growth
period for the economy as a whole, but more for the services
However, the COVID- 19 pandemic has impacted sector. The contribution of the services sector in GVA
adversely the services sector in India. There are only reached closer to 60 per cent.
predictions on the extent and severity of Impact of COVID-
19 since the pandemic is still continuing with increased It is also important to note that the ‘trade, hotels and
infections. restaurant’ has been the largest contributor to services GVA
except for the period 2012-13 to 2016-17. During this
period, the above said services sub-sector has been replaced
by ‘finance, insurance, real estate and business services’
contributing to 21.96 per cent of the GVA.
Table II provides the compound annual growth rates at Of all the periods discussed, the growth rate of
2004-05 constant prices. It is seen that in sub-period from services GVA was highest (11.8 per cent) during the period
1991-92 to1996-97, the compound annual growth rate of the from 2003-04 to 2007-08. As in the previous periods
manufacturing sector (9.93 per cent) is highest among different individual sub-sectors of services outperformed the
agriculture (4.70 per cent) and ‘services sector’ (8.14 per average in terms of GVA growth, but during 2003-04 to
cent). Within the services sector however, there is a wide 2007-08, ‘finance, insurance, real estate and business
variation in the growth performance of different sub-sectors. services’ outperformed the average annual growth rate of
Between 1991-92 and 1996-97, the services that have grown services.
at a faster rate than the compound annual growth rate for the
entire services sector have been ‘trade, restaurant and hotels’ During the period from 2008-09 to 2011-12, the
(9.20 per cent) and ‘finance, insurance, real estate and average annual growth rate of all the sub-sectors of services,
business services’ (8.29 per cent). The services that have witnessed decline except, ‘transport, storage and
experienced lower than the average growth in the period communication’ and ‘community, social and personal
from 1991-92 to 1996-97, include ‘construction’ (3.57 per services’. However, during the period from 2012-13 to
cent); ‘transport, storage and communication’ (7.77 per 2016-17, the ‘construction’ sector has witnessed significant
cent); and ‘community, social and personal services’ (7.64 decline in its average annual growth rate followed by
per cent). ‘community, social and personal services’. Finally, there are
two services namely, ‘trade, restaurant and hotels’ and
In the second sub-period from 1997-98 to 2002-03, the ‘transport, storage and communication’ that stand out
pattern of growth in the services sector is more or less prominently in terms of high growth in recent years. Both
similar to first sub-period from 1950 to 1966. However, in these services have accounted for non-significant shares in
case of manufacturing sector significant fall has been the 1950s, 1960s right up to 1980s. It can be said that
witnessed in the average annual growth rate from 9.93 impressive progress in IT and IT enabled services and
percent in 1991-92 to 1996-97 to 3.90 per cent in 1997-98 to addition to existing stock of telephonic communication;
2002-03. particularly mobiles have played a key role in such a
growth.