Artha Vijnana: Journal of The Gokhale Institute of Politics and Economics

Madhusudan Datta ¹, Sulagna Bhattacharya ²

Affiliations
1 Sardar Patel Institute of Economic and Social Research, Thaltej Road, Near Doordarshan Towers, Ahmedabad 380054, IN
2 Department of Economics, University of Kalyani, Kalyani 741235, IN

Abstract

The paper analyses the rapid rise in relative share of the tertiary sector of the Indian economy during the nineties and later by dividing services into two parts according to use – intermediate and final services. The relative share of the secondary sector, which has by far the greatest intensity of intermediate use of services, did not rise during the period when, nevertheless, intermediate services maintained parity with final services in growth. During the period rise in private final consumption expenditure and exports were rapid. So, the parity implied that value added in intermediate services also increased faster than GDP. This was possible because of significant increase in the intensity of intermediate service use in the secondary sector.

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Madhusudan Datta ¹

Affiliations
1 Department of Economics, University of Kalyani, West Bengal, IN

Abstract

Distributive trade accounts for roughly two-fifths of the service sector which has grown steadily relative to Gross Domestic Product (GDP) in the Indian economy. To explain the growth of trade share in GDP it is useful divide it into two parts - trade in final goods (Final Trade Ratio, (FTR)) and that in intermediate goods (Intermediate Trade Ratio, (ITR)), Rough estimates show that the FTR does not have a strong upward or downward trend but the ITR has a strong rising trend Mainly, the share of output of manufacturing and construction' (MNC) in GDP seems to explain the ITR. Thus the rising trade ratio results form the process of industrialization.

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