Highlight any 3 factors responsible for growth of service sector in the Indian economy
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Major factors responsible for the high growth of the service sector in India:
Economic reforms in 1991: Economic reforms introduced in 1991 allowed MNCs to enter the Indian market. It abolished restrictions on foreign investment and opened the doors for inflow of foreign capital. Government-liberalised policy enabled the increase of foreign direct investment drastically. It brought several changes in the Indian market.
Low labour cost: The cost of labour in India was comparatively lower than developed nations. This attracted multinational companies to outsource their business service activities in India. Hence, the service industry was rapidly grown with the companies who identified the importance of business outsourcing process such as training, teaching and marketing to improve their business performance.
Growth of Information Technology (IT): Growth of the service sector was highly stimulated by the growth of information technology (IT) in India. IT helped perform vital service businesses of the country. Highly skilled software resources are found in India. Many state governments such as Andhra Pradesh, Madhya Pradesh, Karnataka, Maharashtra and Delhi emphasised on the importance of the IT sector.
Structural changes: Structural changes were taking place in the Indian economy, i.e. transformation from the primary sector to the tertiary sector. This transformation caused an increase in the demand for the service sector.
Market orientation: The manufacturing sector faced many changes in the competitive condition and demand-supply forces in the market. This diverted their attention from production to market orientation. Further, it forced manufacturing