Changing Profile of the Service Industries: A Hope for Industrial Development in North Eastern States of India

Abstract

This paper analyses the sectoral composition of Net State Domestic Products of the North-Eastern states of India for the period 1980-1996. It is revealed that there has been a growing trend of ‘tertiarisation’ of the structures of production. The emergence of service sector in a dominating fashion drew the attention to examine further, the possibility of its ‘catalytic’ role in the economic development of the region. For this purpose the structure of service sector and changes with in the sub-sectors of the service industries for the same period is further investigated. The recent development trends show that major contribution towards the growth of service industries is due to increase in public administration expenditure. Though, construction and trade, hotel and restaurants sector are also developing in some of the NE states. But other important service sectors like transport, storage and communication and banking and insurance are yet to develop to their full potential in this region. The issue related to sustainability of growth of service sector and thus generating employment and income opportunities in the absence of significantly developed industrial sector is also discussed. It is emphasized that in the short run growth of service sector may provide impetus to generate additional employment and income opportunities, however in the long run the simultaneous growth of agricultural, industrial and service sector is desirable in order to maximize the inter sectoral linkage advantages. Inter-state comparative analysis suggests that the states which are adopting more focused approach towards economic growth by implementing state level economic reforms policies will move ahead in future to give better employment and income generating opportunities and thus better standard of living to their people. For marching towards the balanced and sustainable economic development, North-Eastern states have to adopt and implement a more focused growth oriented policy measure.