Goods Induced Service Growth or the Other Way Round?

The paper analyses the rapid rise in relative share of the tertiary sector of the Indian economy during the nineties and later by dividing services into two parts according to use – intermediate and final services. The relative share of the secondary sector, which has by far the greatest intensity of intermediate use of services, did not rise during the period when, nevertheless, intermediate services maintained parity with final services in growth. During the period rise in private final consumption expenditure and exports were rapid. So, the parity implied that value added in intermediate services also increased faster than GDP. This was possible because of significant increase in the intensity of intermediate service use in the secondary sector.