Services sector in India accounts for the major share in its GDP, contribution to 57 percent in 2013 as compared to 15 percent in 1950s. The service sector provides employment opportunities to around 27 percent of the workforce in the country. Outsourcing of services and information technology play a major role in the growth of the service sector. The substantial growth in the IT sector can be attributed to increased specialisation, a large pool of low cost labour, and availability of highly educated workers in adequate quantity. The share of IT industry in India has risen from 4.8 percent in 2006 to 7.2 percent in 2008 owing to the increase in number of technology outsourcing companies. The expansion of services has been the driving force behind economic growth in India.
The growth witnessed in this sector is consistently faster than the growth in other sectors. The development story of the country has been a specific one and during its transformative phase, the country would be able to skip the phase of industrialisation-led growth.Although the economy of India has a come a long way in replacing China to become one of the fastest growing economies, but a major challenge that is still persistent is that of income inequality or what is termed as ‘poverty’. As per the Gini coefficient index which is a commonly used measure of inequality, it is reported that more than 25 percent of the population is categorised below the poverty line. In terms of purchasing power parity, the per capita income of India is approximated as 4,542 USD.
The per capita income figure draws down further to 1089 USD in nominal terms, thus classifying India as a low-income economy. This is as per the recent data released by World Bank.Poverty is multi-dimensional. It is not only deprivation of income or vulnerability to economic shocks, but it is deprivation in terms of malnutrition, illiteracy, access to clean water, mortality, sanitation and many such facilities. As per Amartya Sen, poverty can be understood as ‘capability deprivation’. This approach emphasizes capability to engage in a political activity or participation in economic transactions. To achieve significant reduction in prevalence of poverty in India, there is a need for favourable macroeconomic performance. Thus, poverty affecting a vast number of populace needs to be eliminated from the society with a collective effort of government and with the will of the individuals.