Structure

•  Introduction – about service sector in Karnataka
• Body
  • How much each factor has helped the service sector grow ie human capital, fibnancial capital, infrastructure, geography, govt policies etc
  • Note on the trends of the growth
• Conclusion- can include few suggestions or recent policy measure by state govt

Content

• Service sector also known as the tertiary sector of the economy is expanding at a faster It is one of the three sectors of the economy. Service sector involves of activities beginning from the production of goods and service until it reaches to the consumer. For the last 30 years there has been a substantial shift from the primary and secondary sector to the service sector. Now it has become a largest sector of the economy.
• The service sector activities include trade, commerce, transport, communications, hotel and restaurant, banking and finance, health and education, tourism, share market, film industry, insurance, astrology industry, advertisement industry, sports, legal service, publishing industry, mass media ,
• “Soft” part of the economy in the service sector includes all activities which people offer their knowledge and time to improve productivity, performance, potential and sustainability and also known as advice, experience and discussion include in the service Further, the service sector activities can be grouped into:

1. Trade
2. Hotels and restaurants
3. Transport including tourist assistance activities as well as activities of travel agencies and tour
4. Storage and communication
5. Banking and Insurance
6. Real estate and ownership of dwellings
7. Business services including accounting; software development; data processing services; business and management consultancy; architectural, engineering and other technical consultancy; advertisement and other business
8. Public administration and defense
9. Other services including education, medical and health, religious and other community services
10. Personal services and activities of extra- territorial organization and bodies

Service sector scenario in Karnataka

• Karnataka ranks 1st in software/service exports and stands 4th in merchandise exports in the national export Karnataka's exports amounted to about Rs. The share of merchandise exports in the National exports constitutes around 6.21% and software / service exports around 40% for the year 2014-15.
• The state accounts for 38 percent of the country's IT
• Similarly, electronics and computer software accounted for 61 percent of the state's exports in last fiscal
• The healthy growth of the services sector, led by its software industry has bailed out the state, as the farm sector growth plunged to 5 percent this fiscal from 9.4 percent last fiscal. The 8.9 percent growth of the IT-driven services sector growth is expected to boost Karnataka's economy in 2014-15
• The IT industry in the state employs about a million (10 lakh) people directly and three million indirectly, as every technology job creates three indirect
• The state is home to 2,500 IT firms including global software majors like Infosys and Wipro and multinationals such as IBM, Accenture, HP, Intel, Microsoft, GE and Texas Instruments among IT exports comprising software services and products is projected to be a whopping Rs.2 lakh crore from across the state, with Bengaluru accounting for 90 percent of it.

Trends and Factors leading to growth of service sector

• The reasons for the growth of service sector in general can be directly traced to the post 1991
• Apart from that, other factors that are leading to the growth of the sector include both demand and supply
• On the demand side, the high growth of services output was mostly attributed to factors such as
  • increasing input usage of services by other sectors, mainly manufacturing sector;
  • higher foreign demand and
  • high income elasticity for services
• On the supply side, the increased trade in services following trade liberalisation policies and other reforms in 1990s induced this
• There are also many other reasons like;
• economic affluence,
• changing role of women,
• cultural changes,
• awareness towards conserving natural resources,
• development of markets,
• increased consciousness of health care,

Karnataka continues to be the most preferred destination for all global IT & BT giants due to numerous favorable factors such as:

1. Pro-active Government
2. Industry friendly Labour Laws
3. Salubrious Climate
4. Excellent Law & Order situation
5. Absence of Natural Calamities
6. Talent pool of highly trained professionals
7. Cosmopolitan social life in the cities particularly at Bengaluru
8. Investor friendly opportunities
9. Excellent infrastructure
10. Readily available land
11. Highly skilled technical manpower base
12. Large number of technical and research institutes
13. Technology savvy work force with proficiency in English
14. Cultural diversity and cosmopolitan urban centres
15. Advanced healthcare facilities
16. Connectivity through air, rail, sea and road network integrated with the rest of the world
17. Liberalised economy with single window clearance for investors
18. Excellent logistics support
19. Abundant primary resources State

Karnataka is driving domestic growth, crafting careers and creating wealth through a potent mix of resource based, skill based, technology based and knowledge based products and services.

• The State has a living tradition of employing technology to trace a steady growth curve across various sectors of the economy, earning in the process, the enviable tag of being ―the most technology savvy State‖ in India.
• The State‘s entrepreneurial spirit in innovations and R&D has given recognition world
• over. The state is known as Silicon Valley of India.
• This growth has primarily occurred in Bangalore city and its environs though the industry has now begun moving towards other centers such as Mysore, Mangalore and Hubli- Karnataka also has the largest number of Medical Institutes & Industrial Training Institutes (ITI) in the country.
• Karnataka‘s economic growth across sectors, namely: Information Technology, Bio Technology, Aerospace, Machine Tools, Animation and Gaming, Telecommunication, Agri Business and others has been rapid and on a steady
  • It offers plethora of opportunities for investors across
  • The Government is focused on building critical infrastructure required for the
  • The Government‘s priority is also to speed up the implementation of the projects approved in the
  • The Government‘s priority is also to speed up the implementation of the projects approved in the state. Some of the prominent cities in the state are Bengaluru, Mysore, Mangalore, Belgaum, Gulbarga, Hubli-Dharwad, Shimoga, Kolar, Tumkur and
• State has been ranked 1st for a healthy business climate and attracting investments by World Bank's Investment Climate Index and Bangalore – Best India City to Live in - 'Quality of Living Survey - Worldwide Rankings, 2011'– Mercer
• Karnataka - The Knowledge Hub of Asia Karnataka accounts for around 5% of India‘s national income and
• the State has been ranked No. 1 by the World Bank for its investment climate in a study that analysed 16 States using 46investment
• The fact that one new MNC invests in the State every week is testimony for the fact that Karnataka is the leading investment destination in the country. One of the fastest- growing states in the country and has a strong industrial base and vibrant tertiary It‘s services sector, has in fact been, the engine of growth.