Sectors of the Indian Economy
Introduction – Sectors of the Indian Economy
All the activities that involve the production and distribution of products and
services are called economic activities.
Economic activities in India are classified into three different sectors:
Primary sector
Secondary sector and
Tertiary sector
The primary sector includes activities that use natural resources to produce natural
goods, like agriculture, dairy farming, poultry, fishing, mining and forestry.
The primary sector is also called the agriculture and related sector.
The secondary sector includes activities that use natural products or other raw
materials for industrial manufacturing of goods.
The secondary sector is also called the industrial sector.
The tertiary sector includes activities that support the manufacturing and
distribution of goods produced in the primary and secondary sectors.
The tertiary sector includes education, healthcare, accounting, legal services, law
and order, fire-fighting and office administration.
The tertiary sector is also called the services sector.
Primary, secondary and tertiary sector’s economic activities are interdependent on
each other.
Comparing Different Sectors
The primary, secondary and tertiary sectors of the economy involve the production
of a large number of goods and services.
Every product or service has a value.
The final values of goods are used to calculate the production in a sector.
The sum of the total production in the three sectors in a year for a country gives the
Gross Domestic Product (GDP) for that country in that year.
GDP is a globally accepted indicator of the size and health of a country’s economy.
The contribution of different sectors to GDP of a country depends on the state of
development of that country’s economy.
At the initial stage of development, the primary sector is the biggest contribution to
GDP.
In a developing economy, the secondary sector becomes the biggest contributor to
GDP.
In developed countries, the tertiary sector is the biggest contributor to the GDP.
The tertiary sector has become the largest sector of India’s economy.
The tertiary sector has expanded due to:
The government’s initiatives for the expansion of essential services.
The development of agriculture and industry support services.
The growing demand for better and leisure services.
The development and expansion of communication and information
services.
Distribution and Creation of Employment
The tertiary sector has become the largest contributor to India’s GDP.
The increase in production in manufacturing and services is not matched by an
increase in employment opportunities in these sectors.
The primary sector is the largest employer providing work to more than 50 percent
of the working population.
More people engaged in agriculture than required leads to underemployment or
disguised unemployment.
The surplus workers could be employed more gainfully elsewhere.
Many workers in the manufacturing and services sectors suffer from
underemployment.
More employment opportunities can be generated by:
Improving rural infrastructure
Providing easy, affordable loans to farmers
Promoting rural industries
Expanding education and healthcare services
Promoting tourism
Properly implementing employment generation schemes like NREGA
The National Rural Employment Guarantee Act was implemented by the Central
government in 2005.
NREGA guarantees 100 days of employment per year to every person willing to
work and an unemployment allowance if work is not provided.
Organized and Unorganized Sector
Economic activities can be classified into organized and unorganized sectors
depending on the conditions of employment.
The organized sector is characterized by:
Fixed working hours
Job security
Paid leave and other benefits
The unorganized sector is characterized by:
Irregular work
Job insecurity and
No benefits
People work in the unorganized sector because:
The organised sector has fewer job opportunities
Companies from the organised sector operate in the unorganized sector to
evade taxes and avoid giving benefits to workers
And in the last decade, a lot of people have lost their jobs even in the
organised sector
The vulnerable groups in the unorganized sectors are:
Landless farm labourers
Small and marginal farmers
Traditional artisans
The vulnerable groups in urban areas include:
Casual labourers
Street vendors
Rag pickers and
People employed in small-scale industries
People from the scheduled castes and tribes need extra protection.
Public and Private Sector
Based on their ownership, economic activities can be classified as:
Public sector activities
Private sector activities
An economic activity owned and managed by the government is called a public
sector activity.
An economic activity owned and managed by an individual or a group of
individual is called a private sector activity.
The main objective of private sector activities is to make a profit.
The motive of public sector activities is to make a profit and also provide essential
services.
The services that the government provides through public sector activities include:
Basic essential services
Infrastructure development services
Community support services
It is the primary responsibility of the government to provide basic essential
services like education, healthcare, housing, food and nutrition and safe drinking
water to all the people.
The private sector cannot provide such services at a reasonable cost.
Private sector companies sell their products at a price higher than the production
cost to make a profit and stay in business.
The government bears a part of the cost for some commodities to make them
available at a reduced price to some sections of society.
