Impact of Service Sector on Recession

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Service sector also known as tertiary sector consist of following structure:

A. Transport, Communications and Trade
Transport, storage, communication
1. Railways
2. Transport by other means and storage
3. Communications
Trade, hotels, restaurants

B. Finance and real estate
Banking & insurance
Real estate, ownership of dwellings, and business services

C. Community and personal services
Public administration and defense
Other services

Today in India, service sector alone contributes more than half of its GDP. According to financial year 2007-08, share of service sector is about 55.1 % i.e. more than industry sector (26.4%) and agriculture sector (18.5%). The service sector now accounts for more than half the GDP marks a turning point in the evolution of the Indian economy and takes it closer to the essentials of a developed economy.

There was marked increase in rate of services sector’s growth in the eighties and nineties. While the share of services in India's GDP increased by 21 per cent points in the 50 years between 1950 and 2000, nearly 40 per cent of that increase was concentrated in the nineties. One of the reasons for the sudden growth in the services sector in India in the nineties was the liberalisation and globalization in the regulatory framework that gave rise to innovation and higher exports from the services sector.


In macroeconomics, recession is the distinct decline in any particular country’s GDP (gross domestic product). In some references its been said that when a country faces negative real economic growth, for two or more successive quarters of a year, that’s also termed as state of recession. But exact definition of recession has always been controversial and economists tend to differ in defining recession.

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