Roman Saini is teaching live on Unacademy Plus
Effects Of Liberalization On The Indian Economy Lesson-6 Presented By: Roman Saini
In This Lesson Impact of Economic Reforms Impact On Service Sector Conclusion
Impact of Economic Reforms Impact on Service Sector This sector has been major contributor to the high GDP growth rates experienced by the Indian economy. . India's service sector, its contribution to overall GDP has increased sharply, from 41% in 1990-91 to 53% in 2015-16(2011-12 current prices). The share of agriculture and Industry has declined over this period Trade, hotels and restaurants, financial services, international tourism and the telecommunication sector have been the biggest driver of services sector. India remained the eighth largest exporter of commercial services in the world in 2016 (WTO, 2017) with a share of 3.4 per cent, which is double the share of India's merchandise exports in the world.
Impact of Economic Reforms Telecom Sector : The telecom revolution is the biggest legacy of the 1991 reforms. Telephone, especially wireless, subscription has witnessed exponential growth since the beginning of this century .Telephone connections steadily rose in the initial few years, but could never match the SIM-based mobile subscriptions. Wireless telephony constitutes 98.04 per cent of all subscriptions whereas share of landline telephones stands at 1.96 per cent at the end of September 2017. Over the last few years the Indian telecom sector has shown remarkable growth as a result of key reforms. As on end of September 2017, the total subscribers stood at 1207.04 million, out of which 501.99 million connections were in the rural areas and 705.05 million in the urban areas
Impact of Economic Reforms Tourism Sector: Post reforms this sector also one of the main sector contributing to Indian economy. As per the latest World Tourism Barometer of the United Nation's World Tourism Organization international tourist arrivals reached a total of 1.2 billion in 2016, 46 million more than in the previous year. In India, the Tourism sector has been performing well with Foreign Tourist Arrivals (FTAs) growing at 9.7 per cent to 8.8 million and Foreign Exchange Earnings (FEEs) at 8.8 per cent to US$ 22.9 billion in 2016.
Impact of Economic Reforms IT Services : The early 1990s saw a move towards market-oriented economic policies to expand private investment in driving growth. This gave a fillip to the IT and ITeS industry. .The size of the Indian IT and ITeS industry grew from $100 million in 1990 to $1 billion by 1996. By 2000, the Indian IT industry had grown to over $5 billion of revenue-that was 50x from 1990. India's Information Technology - Business Process Management (IT-BPM) industry grew by 8.1 per cent in 2016-17 to US$ 139.9 billion (excluding e-commerce and hardware) from US$ 129.4 billion in 2015-16, as per NASSCOM data. The IT-BPM industry is estimated to employ nearly 3.9 million people in 2016-17, an addition of around 173,000 persons over 2015- 16.
Impact of Economic Reforms Encouraged by the government's liberal policies, MNCs like IBM came back to India and expanded opportunities for the industry further. GE and Nortel set up the first large-scale offshore development centres. The Y2K opportunity opened up unprecedented opportunities for India-led by its vast technical talent pool and industry friendly policies India is also poised to ride the next technology revolution as the third biggest start-up hub globally.
Impact of Economic Reform:s Real Estate : Number of changes were implemented in this sector taken following liberalisation drive in the 1990s. This sector was opened to foreign investment per cent only in 2005 when 100 per cent FDI was allowed in this sector. Since then, FDI inflow in this sector steadily increased. . The share of real estate sector which includes ownership of dwellings accounted for 7.7 per cent in India's overall GVA in 2015-16. . Real estate and construction together, is the second largest employment provider in the country, next only to agriculture.
Impact of Economic Reforms It employed over 40 million workforce in 2013, and as per projections is slated to employ over 52 million workforce by 2017, and 67 million workforce by 2022. . . This implies that it will generate over 15 million jobs over the next five years, which will translate to about three million jobs annually
Impact of Economic Reforms Conclusion The impact of reforms has both positives as well as negatives. . Positives are higher growth rate in GDP, improvement in the Balance of Payment position, increase in foreign exchange reserves, more FDI inflow, access to global markets, hi-tech technology transfer etc. .Reforms led to increases in international competitiveness in a number of sectors including auto components, telecommunications, software, pharmaceuticals, biotechnology, research and development, and professional services provided by scientists, technologists, doctors, nurses, teachers, management professionals and similar professions.
Impact of Economic Reforms Social sectors like education and health have been neglected. Government expenditure (percentage of GDP) on these sectors has so far been dismal Other negative outcome of reforms are Interference in State's Sovereignty, low R&D Investment by MNC, profit maximisation, insignificant employment potential etc.