An Analysis of the Growth of Distributive Trade in India

Distributive trade accounts for roughly two-fifths of the service sector which has grown steadily relative to Gross Domestic Product (GDP) in the Indian economy. To explain the growth of trade share in GDP it is useful divide it into two parts - trade in final goods (Final Trade Ratio, (FTR)) and that in intermediate goods (Intermediate Trade Ratio, (ITR)), Rough estimates show that the FTR does not have a strong upward or downward trend but the ITR has a strong rising trend Mainly, the share of output of manufacturing and construction' (MNC) in GDP seems to explain the ITR. Thus the rising trade ratio results form the process of industrialization.