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Question

Which of the following has helped in the tremendous growth of India's service sector in recent times?

A
Foreign direct investments
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B
Foreign deposit insurance
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C
Foreign direct innovations
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D
Foreign direct inventions
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Solution

The correct option is A Foreign direct investments
A lot of credit for India's service sector growth goes to foreign direct investment (FDI). FDI is an investment made by a firm or an individual of one country in business interests located in another country. FDI policy is expected to bring new infrastructural facilities that will make production more efficient.

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Q.

On attending a conference, which focused on the role of the services sector in the Indian economy I was amazed. The conference gave a very interesting perspective on the role of the service sector in the growth of the Indian economy in relation to growth rates in agriculture and industry. The current situation in India is that the growth rate of services has overtaken both agriculture and industry and is now contributing to more than 50% of GDP. The service sector has the highest growth rate and is the least volatile sector. Growth is particularly marked in public services, IT and financial services.

In some areas, the growth rate of the service sector is 40-50% due to increased use of mobile technologies. India, therefore, has a service-oriented economy. It hasn't followed traditional growth models as in China. However, in the process of doing so it has skipped the manufacturing stage and has jumped straight from the agriculture stage to service stage, which is also the main reason for the expansion of the service sector. In fact, the situation now is such that the growth in the service sector can and will support the agriculture and industrial sectors. However, the only setback for the Indian economy is the lack of growth in the manufacturing sector which causes dependence on other countries, which is not so desirable in terms of job creation and increased prosperity.

Population is also a major concern of the Indian economy. As the population of India grows so also does the number of dependents in the population in both the lower and higher age groups. In such a scenario of increasing population, especially in an economy which is still recovering from the crisis, growth becomes difficult. For such an economy to grow it has to invest. Currently, the public sector invests more than it saves. The household sector saves in surplus, but it is not increasing so it cannot continue to support private and public sectors. There is a massive need to spend on agriculture and infrastructure development in the country. Apart from that, health and education should also be the priority of the government particularly the education of women in order to reduce the birth rate.

Q. According to the passage, which of the following is/ are true about the impact of increasing population on the Indian economy?


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