3. Service Economy

An economy where 50 per cent or more of the produced value comes from the tertiary sector is known as the service economy. First lot of such economies in the world were the early industrialised economies. The tertiary sector provides livelihood to the largest number of people in such economies. In the last decade (2003–04 to 2012–13), growth has increasingly come from the services sector,11 in which contribution to overall growth of the economy has been 65 per cent, while that of the industrial and agricultural sectors have been 27 per cent and 8 per cent, respectively.

By the end of the 19th century, it was a well-established fact, at least in the western world, that industrial activities were a faster way to earn income in comparison to agrarian activities. The Second World War had established the fact for the whole world—and almost every country started their preparation for the process of industrialisation. As country after country successfully industrialised, a pattern of population shift occured from one to another sector of the economy, which was known as the stages of growth of an economy.12 With the intensification of industrialisation, dependency on the primary sector for livelihood decreased and dependency on the secondary sector increased consistently. Similarly, such economies saw a population shift from the secondary to the tertiary sector—and these were known as the ‘post-industrial’ societies or the services societies. Almost the whole Euro- America falls under this category—these economies are having over 50 per cent of their total produce value being contributed by the tertiary sector and over half of the population depends on this sector for their livelihood. Many other countries which started the process of industrialisation in the post-war period did show abberations in this shift of the population and the income—

India being one among them.