From the ‘Hindu rate of growth’ to ‘unstoppable India’: has the services sector played a role?

Abstract

India shifted from an import substitution growth strategy (ISS) to an export-led-growth strategy (ELGS) in July 1991. Consequently, liberalisation was promulgated not only in the industrial sector but in the services sector too in the post-1991 period. ‘services-led-growth strategy’ -- a concomitant of ELGS -- has led to an improvement in the revealed comparative advantage in the export of commercial services during the period 1990--2005. Furthermore, the openness of services and foreign direct investment in services have emerged as important determinants of gross domestic product growth during the period 1995--2005. The author therefore argues that if ISS led to the ‘Hindu rate of growth’ in the first three decades of planning, it is the services-led growth which has made ‘India unstoppable’ on the economic front.