Growing Services in India - An Inter-Sectoral Analysis Based on State-Level Data

This study is an inter-sectoral analysis of state domestic product data to understand the determinants of the services sector growth in India during the 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 the services sector growth, the commodity-producing sector of the country outside the state does play a significant role as well in determining the services sector performance under certain conditions that basically relate to the supply side. The study essentially is an explorative analysis and has not attempted at making any precise econometric estimation.