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.