As a consequence of the adoption of the New Economic Policy(NEP) of 1991, the growth rate of the Indian economy which stood at 3.5 per cent per annum during 1951-79, 5.0 percent per annum during 1980-91, in fact accelerated to 6.1 per cent per annum during 1992-2000. The economy has moved on from the ‘Hindu Rate of Growth’ of 3.5% per annum of yesteryears to ‘unstoppable India’ at 9 % per annum at present. India emerged as one of the fastest growing economies of the world during the 1990s. The remarkable performance of India’s economy is attributable in significant part to the spectacular dynamism shown by the services sector. Against this background, it would be appropriate if we try to find out: What are the constituents of service sector in India? How this sector performed on growth and employment fronts? What happened to service sector productivity in post 1980 period? What are the policies adopted by the Government of India to promote the services sector? what are the problems or challenges ahead in this sector? and what are the prospects /potential for growth in this sector?