Contribution of Services to Output Growth and Productivity in Indian Manufacturing: Pre and Post Reforms

The stylised facts about changes in sector shares as a country develops are by now mwell known. As per capita income starts to grow from a very low level, the share of agriculture in total GDP declines as does the proportion of people employed in agriculture. This decline continues till a minuscule share of population is employed in
agriculture at the high-income level. As manufacturing is the leading sector in growth at low-income levels its share in GDP and the proportion of people employed in it rise. This share eventually stabilises and then starts to decline as the share of services rises at highincome levels. India has followed the standard pattern with respect to GDP shares but not with respect to the share of employment.