The sectoral shares of Gross Value Added (GVA) for the year 2009-10 to 2018-19 show that the share of service sector in GVA in India has increased over the years. Which among the following have driven the maximum increase?
- (a)Electricity, gas, water supply and other utility services
- (b)Trade, hotel, transport, communication and services related to broadcasting
- (c)Public administration, defence and other services
- (d)Financial, real estate and professional services
Correct — D, Financial, real estate and professional services. The Economic Survey 2019-20 sets out the sectoral shares of gross value added for precisely the span the question names, and this sub-sector is the one that moves furthest: from 19.2 per cent of GVA averaged over 2009-10 to 2013-14, to 20.9 per cent averaged over 2014-15 to 2018-19, and to 21.3 per cent in 2018-19 itself. Public administration, defence and other services is the runner-up, rising from 12.7 to 14.7 per cent. Trade, hotel, transport, communication and broadcasting barely moves, from 17.5 to 18.3 per cent and then flat. Services as a whole climb from 49.4 to 54.3 per cent of GVA over the same span, and the financial and professional block accounts for the largest single slice of that climb.
- (a)Electricity, gas, water supply and other utility services — This sub-sector is not part of the service sector in the national accounts at all — it is grouped under industry, alongside mining, manufacturing and construction. Its share does rise, from about 2.4 to 2.8 per cent of GVA, but a rise there cannot explain a rise in the services share.
- (b)Trade, hotel, transport, communication and services related to broadcasting — The largest services block by size, but almost the smallest by change — around 17.5 per cent early in the period and 18.3 per cent at the end. A big share is not the same as a growing one, which is the trap the option is built on.
- (c)Public administration, defence and other services — A genuine second place, up from about 12.7 to 14.7 per cent, and the Economic Survey names it immediately after the financial block. It is the strongest of the three wrong answers and the one worth arguing over.
Gross value added measures output net of intermediate consumption, and the national accounts divide it into eight economic activities grouped under three heads. Agriculture and allied activities form one; industry covers mining and quarrying, manufacturing, electricity, gas, water supply and other utility services, and construction; services cover trade, hotels, transport, storage, communication and broadcasting, then financial, real estate and professional services, then public administration, defence and other services.
Two habits make questions like this answerable. First, check that an offered sub-sector actually belongs to the sector under discussion — utilities carry the words 'other utility services' in their name and sit under industry regardless. Second, separate size from growth: the trade and transport block is the biggest single services activity, so it looks like the obvious driver, while the real movement over this decade came from banking, insurance, real estate and professional and business services. The services share of GVA passed half the economy during this period and stood at about 54 per cent in 2018-19.
- Financial, real estate and professional services rose from 19.2 per cent of GVA in 2009-14 to 21.3 per cent in 2018-19.
- Public administration, defence and other services rose from 12.7 to 14.7 per cent over the same span.
- Trade, hotel, transport, communication and broadcasting moved only from 17.5 to 18.3 per cent.
- Services as a whole rose from 49.4 to 54.3 per cent of GVA between those periods.
- Electricity, gas, water supply and other utility services is classified under industry, and rose from about 2.4 to 2.8 per cent.
Figures from the sectoral-shares table of the Economic Survey 2019-20, which covers exactly the years the question names.
- Treating utilities as a service because the phrase 'other utility services' appears in the name.
- Choosing the largest sub-sector when the question asks which one grew fastest.
- Comparing a 2004-05 series figure with a 2011-12 series figure; the classifications differ and the numbers are not comparable.
A data-recall item lifted from a named table in the Economic Survey. Read the sector headings first, because one option is not in the sector being discussed.
Since 1980, the share of the tertiary sector in the total GDP of India has
- (a) shown an increasing trend
- (b) shown a decreasing trend
- (c) remained constant
- (d) been fluctuating
Answer(a) shown an increasing trend
The long view of the same trend, asked two decades earlier. The rise of services in India's output has been continuous since the 1980s, and the CAPF item simply asks which part of that rise did the work in the most recent decade.
- practice — not a real PYQ
In the national accounts, 'electricity, gas, water supply and other utility services' is grouped under
- (a)agriculture and allied activities
- (b)industry
- (c)services
- (d)a separate fourth sector
Answer(b) industry — along with mining, manufacturing and construction.
- practice — not a real PYQ
Gross value added at basic prices differs from GDP at market prices by
- (a)net exports
- (b)consumption of fixed capital
- (c)product taxes minus product subsidies
- (d)net factor income from abroad
Answer(c) product taxes minus product subsidies — GDP at market prices equals GVA at basic prices plus that difference.