Unlocking Regional Balance: How India’s Services-Led Economy is Thriving, According to NITI Aayog

New Delhi: A recent report from NITI Aayog highlights a positive shift in India’s economy. The services sector, which now represents around 55% of the nation’s Gross Value Added (GVA) for 2024-25, is becoming more balanced across different states. This growth is not just confined to advanced regions; states with previously lower service contributions are finally catching up.

The report outlines a clear trend: less developed states are moving toward parity with their more advanced counterparts. This suggests that India’s shift towards a service-driven economy is widening and becoming more inclusive.

To help guide local strategies, the report introduces a framework categorizing 15 key service sectors into four groups: Engines of Growth, Emerging Stars, Mature Giants, and Struggling Segments. This classification is meant to support targeted efforts across different regions. Key recommendations include enhancing digital infrastructure, improving logistics, fostering innovation, and boosting skills training for workers. These steps aim to promote competitiveness and diversification in the sector.

Another report, titled “India’s Services Sector: Insights from Employment Trends and State-Level Dynamics,” dives deeper into employment trends in services. It draws from data collected in recent years and provides a nuanced understanding of the workforce. The findings reveal two distinct segments within the sector: modern, high-productivity jobs that attract global attention but don’t employ many, and traditional roles that employ large numbers but often offer low pay and unstable conditions.

Despite services being the backbone of employment growth, challenges remain. There are significant disparities in job creation across sectors, and informal work is still a widespread issue. Gender gaps and regional differences highlight the need for a comprehensive employment strategy focused on formalizing jobs and enhancing productivity.

To tackle these challenges, the report proposes a four-part strategy emphasizing formalization and social security for gig workers, targeted skills training, investments in green economy jobs, and the development of service hubs in smaller cities. These measures aim to create high-quality, inclusive employment opportunities.

Experts suggest that strengthening the services sector could position India as a leader in global digital and professional services. By investing in digital infrastructure and human capital, India has the potential to foster innovation and integrate its services across various industries.

As we approach the vision of ‘Viksit Bharat @2047’, these insights and recommendations present a promising path forward for a more equitable and prosperous India.

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