Services sector needs employment-intensive structural transformation

This "growth-employment disconnect" seems to be defining India's services story. Modern services are capital-intensive and globally tradable, generating high productivity but few jobs

The services sector is a key driver of the Indian economy, contributing around 55 per cent of gross value added (GVA) and employing roughly 188 million. Two recent NITI Aayog reports on the sector’s employment trends and GVA dynamics, however, reveal that behind the headline numbers lies a tale of dualism. Over the past six years, the sector has added nearly 40 million jobs, emerging alongside construction as India’s main labour absorber. Yet, while the sector’s employment elasticity, a measure of how growth translates into jobs, rose sharply to 0.63 post-Covid, this revival hides contrasting realities. High-value segments