Growing services in India an inter-sectoral analysis based on state-level data

Abstract

This study is an explorative, inter-sectoral analysis of state domestic product data to understand the determinants of services sector growth in India during recent years. It is a demand side analysis where the services sector output of a specific state is not only a function of the outputs of a state's own agriculture and industry but also the output of the commodity-producing sector of the rest of the Indian economy. The findings suggest that while a state's own industry turns out to be the most important determinant of services sector growth, the commodity-producing sector of the country outside the state does play a significant role as well in determining services sector performance under certain conditions that basically relate to the supply side.