Services sector continues to contribute significantly to India’s growth, accounts for about 55% of total size of the economy in FY24

The Economic Survey 2023-24, presented today by Union Minister of Finance and Corporate Affairs, Ms. Nirmala Sitharaman, underscores the crucial role of the services sector in India's economic growth over the past three decades. Now contributing about 55% to India's economy in FY24, the sector has thrived due to policy reforms, improved infrastructure, and logistics. A significant transformation has occurred with the rapid shift towards digital services, including online payments, e-commerce, and entertainment platforms. The services sector has consistently driven growth, with its Gross Value Added (GVA) contribution increasing notably. In FY24, the sector grew 7.6%, while gross GST collections reached US$ 241.27 billion (Rs. 20.18 lakh crore), an 11.7% increase from the previous year.

The survey highlights the robust expansion of services, with the Purchasing Managers’ Index (PMI) reaching 61.2 in March 2024, reflecting significant business activity. Services exports constituted 44% of India’s total exports in FY24, with India ranking fifth globally. The rise in India’s share of digitally delivered services exports from 4.4% in 2019 to 6.0% in 2023, coupled with a reduction in imports, has improved net services receipts, mitigating the current account deficit. Financing for the sector has seen a boost through domestic credit and international inflows, including US$ 14.9 billion in External Commercial Borrowings (ECBs) in FY24, marking a 58.3% YoY increase and representing 53% of total ECB inflows.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.