However, the growth pattern in the service sector of the economy is somewhat different. Bhagwati (1984) discussed the determinants of service growth in India and pointed out that fragmentation (the externalization of some activities) played a significant role in the growth process of the service sector.
Introduction
- Background of the Study
- Statement of the Problem
- Objectives and Scope of the Study
- Research Questions
- Data and Methodology
- Data
- Methodology
- Layout of the Thesis
It is observed that there has been a consistent increase in the share of services sector in the country's GDP since 1970 (Government of India, 2013). The results of panel data regression analysis indicate an insignificant effect of fragmentation in service sector expansion in India.
Review of Literature
Linkage between Structural Change and Economic Development
According to Ray (2012), the basic characteristics of structural changes in the process of country development are demographic, occupational and production pattern, rural-urban composition and international trade. Citing Pasinetti and Scazzieri (1987), Silva and Teixeira (2008) emphasized that the main source of structural change in the economy is individual and social learning.
Services: Concepts and Definition
Changes in the mental and physical state of consumers are brought about at the request of the consumer as a direct consequence of the activity of any producer. In the third group it includes those services that increase the productive capacity of the user by reducing the cost-benefit ratio per unit of production, e.g.
Issues in Services Sector
- Dominance of Services Sector and its linkage in the Economy
- Structural Shift of Indian Economy
- Explanation of Services Sector Growth in India
- Factors Affecting Demand for Services Sector
- Economic Reforms in Indian Economy
- Issues Related to Productivity
- Other Issues Related to Services Sector
There are several other factors that influence the growth and share of the services sector in the economy. This is an indication of the growth of total factor productivity in the services sector in the Indian economy.
Summing Up
Many authors pointed to the acceleration in the service sector as the main driver of the overall economy in India. The increasing share of the service sector in the country's GDP clearly shows the dominance of the service sector in the Indian economy. It can be observed that the growth rates of the general service sector have increased in successive sub-periods.
In the present study an attempt is made to undertake only a case study of the banking services. Higher growth rate of the private banks indicates growing scope for the private sector and increasing competition in the banking services in India. In addition, the study also reveals an important role of service sector size in the expansion of telecom services in India.
Thus, the expansion of the service sector in the economy creates demand for telecommunications, which leads to higher telecommunications subscriptions.
Trend, Composition and Determinants of Services Sector
Introduction
Magnitude of Services Sector
- Trend in the Share in GDP
- Trend in Growth Rate
The table shows that the share of services sector in the GDP during the year 1980-81 was about 46 percent; which rose to about half of total GDP in the following decade. It is clear from the figure that there has been a steady and continuous rise in the share of service sector in the GDP. It can therefore be argued that the entire decline in the share of the agricultural sector during the period is achieved by the services sector.
Acceleration/Deceleration in GVA of Services Sector/Sub-Sectors/Segments 51
- High Income Elasticity
- International Trade
- Splintering
This literature has mainly focused on three channels in explaining the rapid growth of the service sector in India. Bhagwati (1984) discussed determinants of rapid growth in the service sector, and pointed out that splintering (the externalization of some activities) played a significant role in the growth of service sectors. With this brief review of the literature, the present study attempts to examine the effect of various factors in the growth of service sector in India.
The Econometric Approach
- Time Series Approach
- Panel Data Approach
The details of the analysis and time series analysis under the panel data framework are discussed separately in the next section. In the next logical step of time series econometrics, Johansen's cointegration procedure is applied to check whether the GVA of different service segments, per capita income and export value of the country are cointegrated or move together in long term. Per capita income and export values are included in the equation as control variables.
Summing Up
Moreover, growth in telecom access is also uneven across states in India. Over the next five years, there were significant changes in the shape of the density curve. Similarly, the study notes significant growth in telecom services in India in terms of subscriber base and phone density.
Pattern of Growth and Determinants of Banking Services
Introduction
When choosing a banking service, we are guided by its importance for the development of the economy. In the absence of another representative measure or index, this study also used the productivity growth of banking services to examine the overall performance of the banking sector in India. The broader objective of the chapter is to assess the productivity growth of banking services in India.
Banking Service in India: A Brief Background
Mohan (2005a) argues that deregulation is expected to strengthen competitive forces in the banking system in India. According to the authors, between 1970 and 1992, bank productivity growth in India was around 2 percent. Mohan and Ray (2004) compared the productivity growth of public, private and foreign banks in India during the period 1992 to 2000.
Conceptual and Measurement issues in the Estimation of Productivity
There are two broad measures of productivity, namely single or fractional factor productivity and multiple or total factor productivity (henceforth TFP). The difference between the two sides is often referred to as the increase in total factor productivity. Higher total factor productivity growth means that lower amounts of inputs can be converted into higher levels of output.
Methods used in the Present Study
- Defining Input and Output in Banking Services
However, DEA assumes measurement error or statistical noise in estimation as constant which according to Ataullah et al. Therefore, an attempt has been made in this study to estimate the TFP growth of the banking industry using the Malmquist Productivity Index (MPI) based on input-oriented DEA. In the production approach, production is measured in terms of the number of outstanding accounts and loans.
Results and Discussion
- Banking services in India: Growth over the Years
- Total Factor Productivity Growth of Banking Services in India
- Determinants of Productivity Growth
- Bank Specific Variables
- Macro Economic Variables
However, the share of rural districts in the total number of bank offices has fallen sharply over the years. Similar increase in the share of bank branches has also been observed in urban and metropolitan areas. Moreover, this study observes variation in the growth of TFP across banking groups such as public banks, private banks and foreign banks.
Summing Up
In summary, India's banking services have seen significant growth during the current study period. It was mentioned in NTP 1994 that during that time the teledensity in India was one of the lowest compared to the world average. Changing Total Factor Productivity: An Examination of the Commercial Banking Industry in India and Pakistan. Service Industry Journal.
Growth and Determinants of Telecommunication Services
Introduction
For example, according to the World Bank database, in countries such as Brazil, China and South Africa at the beginning of this century, a quarter of the population had a telephone connection, while only four percent of people in India did. The discussion of this chapter is organized into five sections, including this introduction. The fourth section analyzes the empirical results of the study, while the chapter summary is presented in the fifth section.
Telecommunication in India: the Growth Pattern
What is the growth trend of basic telecommunications services in terms of the number of telephone subscribers and telephone density. It can be seen that the number of fixed telephony subscribers has increased in one place. The relatively low density of telecom services in some states indicates that the penetration of telecom services in India is uneven across states.
Data and Methods
- Data
- Methods
The dependent variable of the regression analysis is teledensity between states during the sample period. In addition to the variables discussed above, we included a period lag of the dependent variable as an independent variable in the regression analysis. The mean and expected sign of each of the explanatory variables discussed above are shown in Table 5.4.
Empirical Results
- Unit Root Test and Half-Life
- Kernel Density Estimates
- Transition Probability Matrix
- Determinants of Teledensity Across States
- Distribution Dynamics in Rural and Urban Teledensity
- Determinants of Teledensity: Rural and Urban Teledensity
- Additional Explanatory Variables
This indicates that the instruments used in the model are orthogonal to the error term. Similarly, the probability of a state remaining in the category below the national average declines faster (from 88 to 60 percent) in urban areas, while the transition is slower (93 to 85 percent) in rural areas over the 15-year time horizon. The distributional dynamics of rural and urban teledensity discussed in the previous section reveal significant differences in the penetration of telecommunications services in rural areas compared to urban areas.
Summing Up
This study attempts to answer this question by examining the trend in gross value addition of the services sector, along with its sub-sectors and segments. The second research question of this study is: what are the important factors that explain the growth in the different service segments. Economic growth, telecommunications development and productivity growth of the telecommunications sector: Evidence from around the world.
Summary of Findings and Conclusion
Recapitulation of the Broad Findings
The study finds an acceleration in growth of the overall services sector, along with all services subsectors except FIRE. The ratio coefficient of inter-industry input to total output, indicated by the IO ratio, is found to be statistically insignificant, implying that fragmentation does not have a significant impact on the rapid expansion of the services sector in India, at least during the period covered in this study is considered. . For example, states with negative relative teledensity are 95 percent likely to remain in the same category over a time horizon.
Conclusion
The study reveals that income per per capita plays a crucial role in the expansion of service segments such as transportation by other means, railways, banking and insurance, real estate and business services, and public administration and defense. In the discussion of determinants of telecommunication services, per capita NSDP and education have been found to be significant factors in the expansion of telecommunication services across Indian states. It indicates that an increase in the number of existing subscribers is likely to generate a higher positive network externality, which will lead to more expansion of telecommunication services.
Limitations of the Study and Future Research Scope
22 As mentioned in the third chapter of this dissertation, India's financial year runs from April 1 of one year to March 31 of the following year. Determinants of the global digital divide: a cross-country analysis of computer and Internet penetration. From 'Hindu growth rate' to 'Unstoppable India': Services sector has played a role.
Percentage Share of Major Sectors to the GDP
Number of Bank Branches in Rural, Semi-Urban, Urban and Metropolitan
Share of Bank Branches in Rural, Semi-Urban, Urban and Metropolitan
Compound Annual Growth Rates of Bank Branches
Contribution of Communication Sector to the GDP of India
Number of Telephone Subscribers in India (1995-2013)
Inflow of Foreign Direct Investment (FDI) to the Telecommunication Sec-
Teledensity in India
Pattern of Relative Teledensity in sample States
Kernel Density Plots of Relative Teledensity
Kernel Density Plots of Relative Teledensity (Rural)
Kernel Density Plots of Relative Teledensity (Urban)
Percentage Share of Major Sectors to GDP
Percentage Share of Sub-sectors and Segments of Services Sector to GDP 44
Compound Annual Growth Rate of Services, Sub-sectors and their Segments 49
Private Final Consumption Expenditure in Services in India (in Percentage) 54
Percentage of Inter-Industry use to Total output of Various Services Segment 57
Results of Johansen Cointegration Test
Results of Toda-Yamamoto Causality test
Effects of Splintering on Services Sector
Year Wise Number of Banks by Category of Ownership
Basic Indicators of Banking Service in India
Trend in Expansion of Bank Office in Rural Areas (in Numbers)
Trend in Expansion of Bank Office in Semi-Urban Areas (in numbers)
Trend in Expansion of Bank Office in Urban Areas (in numbers)
Trend in Expansion of Bank Office in Metropolitan Areas (in numbers) . 87
Description of Variables used in the Regression Analysis
Descriptive Statistics of Determinants of TFP Growth
