Model Question and Answers for APSC | Normally countries shift from agriculture to industry and then later to services, but India shifted directly from agriculture to services. What are the reasons for the huge growth of services vis-a-vis the industry in the country? Can India become a developed country without a strong industrial base?

Ans: Premature deindustrialization in India refers to the decline of the industrial sector in the country before it has reached its full potential. This phenomenon is characterized by a decline in the share of the industrial sector in the Gross Domestic Product (GDP) and employment, and a decline in the growth rate of the industrial sector. On the other hand there is significant growth in service sector.

There are several reasons for premature deindustrialization in India:

• Lack of investment in infrastructure: India has a poor infrastructure, which makes it difficult for industries to operate effectively. This lack of infrastructure has led to a decline in the growth rate of the industrial sector.
• High cost of doing business: India has a high cost of doing business, which includes high taxes, bureaucratic red tape, and high energy costs. These high costs have made it difficult for industries to operate in the country, resulting in a decline in the growth rate of the industrial sector.
• Lack of access to credit: Indian industries often have difficulty accessing credit, which makes it difficult for them to invest in new technologies and expand their operations. This has led to a decline in the growth rate of the industrial sector.
• Protectionism: India has a long history of protectionism, which has led to a decline in the growth rate of the industrial sector. Protectionism has created a closed market, which has prevented foreign companies from competing with domestic companies, resulting in a lack of innovation and productivity.
• Low labor productivity: India has low labor productivity compared to other developing countries, which has led to a decline in the growth rate of the industrial sector. The low labor productivity has made it difficult for industries to compete with other countries, resulting in a decline in the growth rate of the industrial sector.

Premature deindustrialization can have several negative consequences for the Indian economy. It can lead to a decline in GDP growth, increased poverty, and increased unemployment. Therefore, it is important for the Indian government to address the underlying issues that are causing premature deindustrialization, such as lack of investment in infrastructure, high cost of doing business, lack of access to credit, protectionism, and low labor productivity.

There are several reasons for the huge growth of services vis-a-vis industry in India:

• Skilled labor force: India has a large and well-educated labor force, which is well-suited for the service The service sector, particularly the IT and business process outsourcing (BPO) sectors, has been able to take advantage of this skilled labor force.

• Low capital requirement: The service sector requires relatively low capital investment compared to the industry sector. This has made it easier for entrepreneurs to set up service-based businesses, leading to a growth in the service sector.
• Liberalization of the economy: India's economy was liberalized in 1991, which led to an increase in foreign investment and the growth of the service sector. The service sector was able to take advantage of this liberalization, particularly in the areas of IT and BPO.
• Government policies: The Indian government has implemented several policies to support the growth of the service sector, including tax breaks, subsidies, and investment in infrastructure.

It is possible for India to become a developed country without a strong industrial base. However, a strong industrial base is considered to be an important indicator of a country's development. A strong industrial base can generate more employment opportunities, increase productivity, and create a more diversified economy. It also allows for the country to be less dependent on exports and more self-sufficient. Therefore, although India can become a developed country without a strong industrial base, it would be beneficial for the country to have a strong industrial base to provide a more balanced and robust development.