A tale of dualism

The services sector remains informal and unequal

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The services sector is a key driver of the Indian economy, contributing around 55 per cent of gross value added (GVA) and employing roughly 188 million. Two recent NITI Aayog reports on the sector's employment trends and GVA dynamics, however, reveal that behind the headline numbers lies a tale of dualism. Over the past six years, the sector has added nearly 40 million jobs, emerging alongside construction as India's main labour absorber. Yet, while the sector's employment elasticity, a measure of how growth translates into jobs, rose sharply to 0.63 post-Covid, this revival hides contrasting realities. High-value segments such as information technology (elasticity 0.88), finance (0.95), health care (0.94), and transport (0.89) are thriving, buoyed up by digitisation, platform economies, and global demand. But these subsectors employ only a fraction of the workforce. In contrast, trade, education, and personal services the traditional pillars of employment - remain labour-intensive but exhibit weakening job responsiveness. Subsectors such as telecommunications (0.79) and insu