The service sector forms the backbone of social and economic development of a region. It has emerged as the largest and fastest growing sectors in the world economy, making higher contributions to the global output and employment. Its growth rate has been higher than that of agriculture and manufacturing sectors. It is a large and most dynamic part of the Indian economy both in terms of employment potential and contribution to national income. It covers a wide range of activities, such as trading, transportation and communication, financial, real estate and business services, as well as community, social and personal services.


In India, service sector, as a whole, contributed as much as 68.6 per cent of the overall average growth in Gross Domestic Product (GDP) between the years 2002-03 and 2006-07. The economic survey 2011-12 points out that the services sector grew by 9.4 per cent which was little higher than 9.3 per cent in the previous year. This paper investigates the employment situation of service sector growth in India during pre and post reform period. It also examines the future prospects of services sector in India after the economic reform.