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India’s Services Sector: Insights from Employment Trends

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October 29, 2025

Prelims: Current events of national and international importance | Economy

Why in news?

Recently, NITI Aayog has launched the report on “India’s Services Sector: Insights from Employment trends and State-Level Dynamics”.

  • Released by – NITI Aayog.
  • The report is India’s 1st comprehensive study of employment in the services sector.
  • It analysis across sub-sectors, gender, regions, education levels, and job types—moving beyond aggregate trends to present a multi-dimensional workforce profile.

Key findings of the report

  • Slow service sector growth – Employment grew from 22.1% in 1992 to 31.0% in 2022, an increase of 8.9 %, much below the global average - citing World Bank figures.
  • Expansion of employment share – The service sector’s share in total employment in India rose to 29.7 % in 2023–24 from 26.9 % in 2011–12.
  • Sector wise employment growth (in 2023-24) – Agriculture remains the largest employing sector (292 million) followed by Services (188 million) & Industry (153 million).
  • Gender gap – In 2017-2024,
    • Male participation increased from 32.8% to 34.9%,
    • Female participation declined from 25.2% to 20.1%.
    • Agriculture – Increasingly female-dominated, rising from 57.0% to 64.4%, while men’s share fell from 40.2% to 36.3%.
  • Rural-urban divide –
    • Share of services –In 2017-24, rural employment declined from 19.9% to 18.9%,  urban areas increased from 59.1% to 60.8%.
    • In urban areas – 61% of men are employed, while 60% of women are employed.
    • In  rural areas – 24% of men are employed, while 10.5% of women making up just 10.5%.
  • Job type – In 2023-24, 51% (96 million) of workers in service sector are employed in regular wage/salaried roles, whereas, 45% (85 million) were self-employed.
  • Under-representation of youth – Pointing to barriers to entry into regular wage work, insufficient skilling, poor job readiness, and weak school-to-work transitions.
  • Share of older workers [45+ years] – Declines sharply in regular wage jobs – 10% in the 55–59 group to just 1% beyond age 65, only a small fraction continues in self-employment.
  • Sector’s dual character –
    • Modern & high-productivity segments (IT, finance, healthcare, professional services) that are globally competitive yet limited in employment intensity;
    • Traditional segments (trade & transport, etc.) that absorb large numbers of workers but remain predominantly informal and low-paying.
  • Creating a “low-wage trap” – Despite, being the fastest-growing part of the economy, jobs in the service sector remains highly informal, with most workers lacking job security or social protection.

References

  1. The Hindu | NTI Aayog: Uneven job growth in service sector
  2. Business Standard | 'Low-wage job trap' in service sector

 

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