SERVICES
MARKETING
CAUSES
OF GROWTH OF SERVICE SECTOR IN INDIA
India’s service sector is the 12th largest in
the world by nominal GDP and 4th largest when purchasing power is taken into
account. The service sector provides employment to 27% of the population. Let
us look into the factors that have led to the growth of the service sector in
India:
• Economic Affluence- The Indian society is characterized by an
increasing middle class. In addition the liberalization of the Indian economy
has had a positive impact on the Indian households. Their income and
expenditure has been pushed up fostering the demand for goods and services;
• Changing
Role of Women- Earlier women were a
neglected lot, who only had to carry out household chores. But with time there
has been a change in the way of thinking. Women are educated and allowed to
work. They are employed in several erstwhile male dominated services such
asdefence services, police services, postal services, software services, health
services etc. An increase in the number of working women has led to the
creation of a marketfor a number of products and services.
•
Changing Culture
- The traditionally common joint family system is slowly disintegrating and
making way for a nuclear family way of living. This has been accompanied by an
increased demand for a number of services like education, health care,
entertainment, tourism etc. There has also been a marked change in a person’s
way of thinking with respect to investment, recreation and time perception
leading to increased demand for services.
•
Growth of IT Sector In India
- information technology and business outsourcing are amongst the fastest
growing sectors having a cumulative growth rate of revenue. The growth of IT
sector can be attributed to several factors such as increased specialization
and availability of a large pool of low cost, highly skilled educated and
fluent English speaking workers. This supply is matched by increased demand
from foreign customers who are interested in India’s service exports or those
looking to outsource their operation. Growth of the Service Sector in India –
What Does it Augur for the Future 11 Impact Factor(JCC): 1.3423- This article
can be downloaded from www mpactjournals s
• Development o f Markets- Both the urban and the rural areas have
witnessed wide spread retailing and whole selling. In fact retailing has even
extended to remote rural areas.
• Health Care Consciousness -The
present generations are becoming more and more diet and health conscious. They
are resorting to services of gymnasiums and fitness clubs to maintain their
physical and mental health.
• Economic
Liberalization - The opening up of the Indian economy in 1991 was followed
by a policy of disinvestment. This facilitated the entry of multinational
Corporations leading to its accompanying increase in demands. This acted as a
spurt for the development of the service sector.
• Migration
from Rural to Urban Areas -With
rapid industrialization and other developments in this era of globalization,
there takes place large scale migration from the rural to the urban areas. This
changes the life-style and enhances the demand for services.
•
Export Potential
- The services offered by India to various parts of the world include banking,
insurance, transportation, company data services, education, software services,
tourism etc. In fact tourism and software services are among the major foreign
exchange earners of the country.
•
Service Tax -
The coverage of this tax has been extended. The tax net covers hotels and
restaurants, transport, storage and commercialization, financial services, real
estate, business services and social/personal services.
HURDLES
FACED BY THE SERVICE SECTOR The service sector in India faces a number of
hurdles as mentioned below:
Firstly, there is want of adequate
infrastructure not only in the rural areas but also in the urban areas. Our
mega cities face constraints in the form of power cuts, bumpy roads, traffic
congestion and pollution. This has a telling effect on the quality of services
provided.
Secondly,
while the share of the service sector was 56.9% in 2012, the share in
employment was only 28%.
Thirdly,
tourism is a lucrative service in view of India’s natural beauty and other
pleasing factors, but bureaucratic delays and harassment /cheating by touts and
agents act as an impending factor.
Fourthly,
good mannerism and etiquettes are the hallmarks of service providers but many
of our banks, hotels, restaurants and hospitals are seriously lagging on this
front. The problem is even more adverse in case of the public sector
institutions.
Fifthly,
there are too many administrative procedures involved, resulting in various
visible and invisible barriers like visa and sector specific restrictions.
Sixthly
for the service sector to grow and have an impact on the growth process, it has
to be accompanied by simultaneous developments of both the primary and
secondary sectors.
Seventhly,
Indian service providers face stiff competition particularly Business Process
outsourcing and IT providers. They have to improve their quality if they have
to compete with the best in the world.
FUTURE
PROSPECTS
Indian
economy which was growing at an accelerated rate from 1998 to 2010 had a
setback of sorts in 2012. The economy however is gradually picking up and
moving in the right path. This will lead undoubtedly to increase the Per Capita
Income of the high and middle income groups, while simultaneously striving to
reduce the number of people below the poverty line. The entire process would
have stimulating effect with an increase in the literacy level. India has to
her credit one of the youngest populations in the world. The cumulative effects
of all this will be an increase in the demand for services like education,
health, hotels, restaurants etc. According to the Planning Commission India’s
service sector is expected to grow at the rate of 10% per annum in the period
between 2012 and 2017. India also ranks high in international trade accounting
for 3.34% of exports and 3.31% of imports of services. She is in addition among
the top 10 rankers of WTO members as regards export and import of services.
