CHANGES IN THE STRUCTURE OF INDIAN ECONOMY AND TRENDS IN NATIONAL INCOME Three Board Sectors of Indian Economy 4.2. Role of Agriculture in Indian Economy 4.3 Interdependence between Agricultural and Industrial Sectors 4.3.1 Role of Agricultural Sector in Industrial Sector 4.3.2. Role of Industrial Sector in Agricultural Sector 4.4 Changes in Structure of Indian Economy— Shown By Changes in GDP 4.4.1 Overall GDP Growth Rate 4.4.2 Changes in Sectoral Shares in GDP in Post Independence Era 4.5 Trends in National Income 4.5.1 Trends in National Income in Post Independence Era 4.5.2 Problems in Estimation of National Income in India 4.5.3 Causes of Slow Progress of National Income 4.5.4 Conclusion and Suggestions to Raise National Income in India « Summary ¢ Review Questions I 4.1. THREE BROAD SECTORS OF INDIAN ECONOMY At present, the Indian economy is divided into three broad sectors an eight sub-sectors. These sectors and sub-sectors are: 1. Primary sector The sub-sectors of agriculture and allied activities are : (a) Agriculture, forestry and fishing (b) Mining and Quarrying.42 Indian This sector produces goods by exploiting natural resources like lang, ; forests, mines, etc. : 2. Secondary sector includes mainly industrial activities. The sub-sectors of aes 1 ae (a) Manufacturing (i) Registered (ii) Unregistered (b) Construction (c) Electricity, Gas and Water supply. 3. Tertiary sector The sub-sectors of tertiary sector are : (a) Trade, Hotels, Transport and Communication (b) Financing, Insurance, Real estate and Business services (c) Community, Social and Personal services. 4.2 ROLE OF AGRICULTURE IN INDIAN ECONOMY cent of population lives in rural areas (Census 2011). Growth of Indian agriculture is necessary condition for ‘i growth. The role and contribution of agriculture in Indian is clear from the following considerations; 1. Share in Gross Domestic Product (GDP) Agriculture is the main source of our GDP. In 1950-51, it contribute over 50 per cent to our national income. In 2014-15, it contribu ed 17.4 per cent to India’s GDP (at 2011-12 prices). Since such a larg part of national income comes from the agricultural sector; it sho how important it is for our economy. Statistics reveals that share agriculture in national income in UK is 2 per cent; in USA 4 per cei in Japan 5 per cent. It implies that these economies are far lent on the agricultural sector, ployment is the largest employment providing- sector in c Vides means of livelihood to 46.1 per cent force in 2015-16 (Economie Survey 20)Changes in the Structure of Indian Economy 43 In UK and USA, agriculture provides employment to of the working force. In France, Germany and ie a eae , is between 5 per cent to 8 per cent. : 3. Basis for Industrial Development In India, agriculture plays a pivotal role in the development of the industrial sector. Raw materials like cotton, wood, sugarcane, jute, oilseeds, etc., are supplied by agriculture to manufacturing industries. Even and small scale industries such as handloom weaving, oil extracting, and rice extracting depend on agriculture. Although industries such as steel and alloy, chemical heavy machinery, ship- building may not have direct relation with agriculture, yet they are indirectly dependent on agriculture. If agriculture is underdeveloped, industry cannot expand because of inadequate supply of raw materials. 4. Importance in Foreign Trade India is among 15 leading exporters of agricultural products in the world. As per Economic Survey 2015-16, India’s agricultural exports were 12.3% during 2014-15 and 2015-16. On the other hand, India’s agricultural imports were 3.9% during the same period. 5. Importance in Household Consumption In India, since per capita income is very low, a large proportion of the income (which is around 60 per cent) is spent on foodgrains. Agricultural products play a very significant role in fulfilling the daily requirement of people of the country. 6. Significance for Trade and Services A large portion of country’s trade and services depend upon agricultural operations. Most prominent of these are transport, banking, cold storage, warehouse, etc. Agricultural growth has direct impact poverty eradication. Prosperity of agriculture can also largely the prosperity of the Indian economy. 5 7. Custodian of Indian Culture Importance of Indian agrict life of people. Our long ¢ religion has been best p Ancient glorious cula4 Vndting S&. Share in Total Gross Capital Formation in the Country Agriculture contributed 15.8 per cent to total gross capital fort the country (at 2011-12 prices) in 2014-15 4.3 INTERDEPENDENCE BETWEEN AGRICULTURAL AND INDUSTRIAL SECTORS All sectors of'an economy are dependent on one another for their devel asic Consuny needs of the whole economy, including the industrial sector, “ay agriculture. In India, agricultural products constitute 60 Per cent of oy td consumption and 85 per cent of the industrial Consumption, Ih griculture fails in any year due to natural calamity, the wh, economy comes to a stand still. In fact, for meaningful economic Stow, itis necessary that industry and agriculture develop side by side. and for the advancement of the economy as a whole, B } hous India, 4.3.1 Role of Agricultural Sector in Industrial Sector iculture plays a vital role in industrial development in the following Ways. | ) Agriculture provides food products nd other consumption goods for. fulfilling the needs of population, Agriculture provides inputs for the development of many agro-based_ industries in the country, Agriculture provides raw materials toa number of industries such as cotton textile, jute, sugar, tobacco, edible oil and many more. The development of these industries directly depend upon the development of agriculture because their source of Taw materials lies within the agricultural sector, Agricultural sector provides market for the manufactured goods, If agricultural sector is well developed, income of the people in Breas will be high. This will increase the demand for industrial prod tural areas. With increased demand to fulfil, the profit and sale ds of industries would increase and result in greater surplus for i ent in industries. On the other hand, if the agricultural Well developed, the market for industrial sector will be This will hamper industrial and economic growth. like edible oils, jute, cotton, sugar, al medicines, etc., are a major source of emplo ctor in Agricultural Sector develop on its own, agricultural sector al Sector for its development. It is: clear freas Changes in the Structure of Indian Economy increased to a great extent by bringing more land under cultivation. The only way to increase agricultural production is to improve productivity of agricultural land and labour. These productivities can be improved only by using mechanised ways of operation. This is possible only if the industry is well-developed. Industries supply latest farm machines and tools which make mechanisation of agriculture possible. (2) With the help of industrial sector irrigation facilities, fertilisers, Pesticides, ete., have been made available to the agricultural sector for its growth and development ; (3) As agricultural sector develops, there is usually a shift of working population away from agriculture to other sectors of the country. If other sectors (secondary and tertiary) are well developed to absorb this section of the people, the structure of an economy changes and growth takes place. (4) Industries provide latest research and development to the agricultural sector. (5) Industries provide power and electricity for agricultural operations. (6) Industries provide a major market for agricultural products like foodgrains, vegetables, etc. (7) Industries provide a large amount of finance to agricultural sector. (8) Industry provides information network on T.V., newspaper and radio regarding weather, seeds and other technical guidance. From the above discussion, we can conclude that agricultural sector and industrial sector are inter-dependent and interrelated. They affect each other in their growth. Development of both is essential for economic Development of the country. 4.4. CHANGES IN STRUCTURE OF INDIAN ECONOMY — SHOWN BY CHANGES IN GDP As an economy grows, importance of primary sector (mainly agriculture) declines and the importance of secondary sector (mainly industry) and tertiary sector (all kinds of services) increases, The structure of GDP at factor cost refers to the share of primary, secondary and tertiary sectors in the GDP at factor cost. Structural changes in output refer to the changes in relative contribution of the three sectors in GDP (at factor cost) over the years. 4.4.1 Overall GDP Growth Rates Table 4.1 gives rate of growth of GDP (at factor cost) for various years.(at factor cost) ‘ (in E ™ 41: Rate of Growth of GDF Table of wth of GDP at Factor Cost ene Rate of Gro’ a Sah Year “) 200k 95 2005-06 86 2009-10 93 =I i 2a ‘A 2011-12 Prices 34 -13 ais 63 2014-15 a [2015-16 Sources : Economic Survey 2015-16 The table shows overall GDP growth rate. It shows: 1. The year 2006-07 saw highest growth rate of 9.6 per cent and the ye 2012-13 saw the lowest growth rate of 5.4%. 2. The reasons for slowdown are as follows: (a) crisis in the eurozone area (b) near-recessionary conditions prevaling in Europe (c) Sluggish growth in industralised countries like USA. (d) Staganation in Japan (e) Hardening international prices of crude oil (f) Tightening of domestic monetary policy (raising the reporate) 4.4.2 Changes in Sectoral Share in GDP in Post Independence Era Table 4.2 gives the growth rate of real GDP (at factor cost) by industry o origin at 1999-2000 prices in the post independence era. i Earlier the base year was 2004-2005, therefore table 4.3 gives the gi ft rate of real GDP (at factor cost) by industry of origin at 2004-2005 from the year 2005-06 to 2011-12. The base year has been revised to 2011-12 It is shown in Table 4.4, a Table 4.2: Annual Growth Rates of Real GDP (at factor cost) by Industry of Origin (at 1999-2000 prices) from 1951-52 to 2001-02 (in per c [erat [oie [nora aeChanges in the Structure of Indian Economy 2. Manufacturing, Construction, Electricity, Gas and Water supply 3.(a) Trade, Hotels, Trans- port and Communication (b) Financing, Insurance, Real estate and Business services (c) Public administra- tion, Defence and Other services Table 4.3: Annual Growth Rate of Real Gross Domestic Product (at factor cost) by Industry of Origin (at 2004-05 prices) (in per cent) 2005- 06 | (@) Agriculture, Forestry & Fishing 5 0. (b) Mining and Quarrying Pcmentasigeetsae 10.7 [103 2. (a) Manufacturing et (b) Construction 10.9 751104 | 123 (c) Electricity, Gas & Water Supply 3.(a) Trade, Hotels, Transport and Communication (b) Financing, Insurance, Real estate and Business services (c) Public administration, defence and other services GDP at Factor Cost Source: Economic Survey 2012-13 Table 4.2 shows that: 1. Growth rate of GDP (at factor cost) was lowest in 1971-72 at 1.0 per cent and in 1991-92 at 1.4 per cent. It was highest in 1988-89 at 10.2 percent, 2. After economic reforms were taken up in 1991, growth rate of GDP showed significant improvement. In 2003-04, it increased to 8.5 Percent,Indian 48 3. Sectoral share of tertiary sector has improved signi real GDp, Trade, hotels, transport and communication, finan ee estate and business services have shown three eae 2 ps the 59 years of independence, however not much pee righ nin the share of public administration, defence and ot ye 4. Agriculture sector has shown eae Pe Osi 1962-63, 196582 a hr ne het ee 1988-89 at 15.7 per cent, followed by the year 1967-68 when it was 14.1 percent a mixed response. The share of this sector 5. Industry sector has shown 1979-80. It was highest in the year in GDP was negative in the year 1995-96 at 12.2 percent. Table 4.3 shows that: 1. In 2009-10, the GDP at factor cos! industrial and the service sectors grow! respectively. This recovery was impressive : : (a) It came about despite a decline of 0.2 per cent in agricultural out- put, which was the consequence of sub-normal monsoons. It foreshadows renewed momentum in the manufacturing sec- "tor which had seen continuous decline in the growth rate since " 2007-08. Indeed, manufacturing growth has almost doubled in period from 2008-09 to 2009-10. has been recovery in the growth rate of gross fixed capital ion, which had declined significantly in 2008-09 as per the d National Accounts Statistics. t grew at 8.6 per cent, with the rowing at 9.5 and 10.2 per cent for at least three reasons: and allied sector has shown deceleration in growth from ‘in 2007-08 to 0.4 per cent in 2008-09. It increased to 7.5 10-11 and fell again to 3.1 per cent in 2011-12. Growth in weak in 2012-13, due to lower than normal rainfall, shown deceleration in growth from 10.3 per cent in er cent 2010-11 and is further expected to fall to 4.5 and communication have been doing well — 0-11. However, it declined to 7.0 per cent _ e and business services have 10 per cent in 2010-11 to 11.7‘Changes im the Structure of Indian Economy Table 4.4: Annual Growth Rates of Real Gross Val lue Added Industry of Origin (%) (at 2011-12 Prices) a [3 Item [aAbee? i ania se) ames {. (@) Agriculture, Forestry & Fishing 4.0 13 2.0 (b) Mining and Quarrying : ; 2 (a) Manufacturing 53 34 7A (®) Construction (c) Electricity, Gas & Water Supply 3. (a) Trade, Hotels, Transport and 78 9.8 oS Communication (©) Financing. Insurance, Real estate and 10.1 10.6 103 Business services (©) Community social and personal 45 10.7 6.9 services GDP at Factor Cost 6.3 7 73 Source: Economic Survey 2015-16, Vol. IT Table 4.4 shows that: 1. The CSO has shifted the base year to 2011-12 from 2004-05. 2. The estimates at disaggregated level indicate that agriculture and allied sectors - including crops, livestock, forestry and logging, and fishing - picked up growth in 2013-14. This was expected as 2013-14 happened to be an exceptionally good year from the point of view of rainfall. The upward revision in manufacturing growth in the new series also owes to inclusion of trade carried out by manufacturing companies in the manufacturing sector itself, which was earlier part of the services sector. The growth in manufacturing sector was chiefly on account of robust growth in textiles, apparels, and leather products. Food products are yet to pick up momentum. 4. The services sector triggered the growth momentum in 2015-16. Services like trade and repair services, rail transport, communication and broadcasting services and miscellaneous services achieved double- digits/close to double-digits growth during the year. However, sectors like water transport and storage services lagged behind. Financing, insurance, real estate, and business services, one of the most dynamic sector in the economy in recent years, is reckoned to have driven growth in the current year. vaIndian 4.5 TRENDS IN NATIONAL INCOME 4.5.1 Trends in National Income in Post Independence Era Trends in national income are studied to understand in India. Table 4.5 gives the annual average growth in post independence era. Table 4.5 : Annual Average Growth Rates of N; 2004-2005 Prices in per cer. First Plan (1951-56) Sond Pn 9566) | ——2 a. ene a ‘ Tenth Plan (2002-2007) Eleventh Plan (2007-2012) Source: Economic Survey 2012-13 the impact Of Plane: rate in Nationa} i ational Income at Figures of national income at current prices do not give a correct picture ; bout the growth of an economy, for an increase in national income prices reflects the combined influence of two factors: e in the production of real goods and services. Prices. If the increase in national income is due to the fi is an indicator of real growth because it implies that services become available to the people. If it is due to | factor, it Tepresents an unreal inflation of national income in terms. Consequently, national income figures are deflated it prices to eliminate the effect of any change of price le he period. Thus, national income figures at constant p able. The growth of net national product at constant of the total productive effort on the part of the community an tate of growth of goods and services in an economy.Changes in the Structure of Indian Economy 41 Table 4.5 gives annual growth rates of National Income at factor cost at 2004-05 prices (in per cent): 1, During the First Plan, annual average growth rate of NNP was 4.2 per cent, which remained stagnant at 4.2 per cent during the Second plan, 2. However, during the Third Plan, annual average increase in national income slumped down to 2.6 per cent which was just sufficient to neutralise the growth of population. This is indicated by the fact that there was 0.2 rate of growth of per capita income during the Third Plan. This was largely the consequence of a serious drought in 1965-66 and thus the growth rate got depressed. This was followed by another drought year as also a business recession. After 1967-68, the economy started picking up and the growth rate showed signs of improvement. 3. During the Fourth Plan (1969-74) period, the average annual rate of growth of national income was 3.2 per cent. The sharp increase in prices during 1972-73 and 1973-74 and the shortfalls in production on account of lower utilisation of capacity were the principal factors responsible for a lower growth rate during the Fourth Plan. 4. During the Fifth Plan (1974-79), the average annual increase in national income was of the order of 4.9 percent. On the whole, the performance of the economy during the Fifth Plan can be considered satisfactory. 5. India’s national income registered a growth rate of 5.4 percent during the Sixth Plan (1980-85). 6. During the Seventh Plan (1985-90), India’s NNP grew on an average at the rate of 5.5 per cent per annum. Obviously, Seventh Plan achieved its objective of 5 per cent growth rate of NNP. This was a welcome development. 7. During the Eighth Plan (1992-97), NNP growth rate of the order of 6.7 per cent was achieved. This was a healthy trend. 8. During the Ninth Plan (1997-2002), national income recorded growth rate of 5.5 per cent per annum. 9. During the Tenth Plan (2002-2007), national income recorded growth of 7.5 per cent per annum. _ 10. During the Eleventh Plan (2007-2012), national income recorded growth of 7.8 per cent per annum. 45.2 Problems in Estimation of National Income in India Procedure of calculating national income is not easy. It is very difficult ( complicated. Estimation becomes even more difficult in a developing ; like India. Some of difficulties in estimation of national income42 1. Inadequate and Unreliable Data There are no legal forces which will ensure that people record aj} For instance, a farmer will not keep a record of his income; data jg nised sector; rich people keep a lot of black money; this makes correct estimation of national income difficult, 2. Difficult Differentiation between Economic and Non-economic Activities It is difficult to demarcate between economic activities which are j in national income calculation and non-economic activities yy excluded from national income. hich 3. Conceptual Difficulties Difficulty arises in interpreting new products like synthetic rubber oa ney chemical fertilizer as they did not exist in the base year. Problem arises we eStimating them at constant prices. 4 Counting very difficult to differentiate between intermediate 200d and rf example, sugarcane is a final good if consumed domestically | ediate good if sold to sugar industry. Sugar may beg consumed domestically but an intermediate good if sold to. Ty difficult to avoid double counting and get correct estimate. d Unorganised Production Quesses on income earned from those units where red, unorganised and unrecorded. lata Collection Agencies agencies are generally unqualified and incompetent, The — enumerators and investigators affect the correctness" €r system prevails. There is no record of On self-consumed goods is not available. This income incorrect. bsidiary Jobs din more than one occ makes thi ne occupation or job. Lack of informat € estimation of national income incorrect.in the Structure of Indian Economy 3. Causes of Slow Progress of National Income main reasons why progress in National Income has fallen short of s in various Five-year Plans are: Inadequate Capital » rate of capital formation in Indian economy is very low because of income, low saving and consequently, low investment. Low capital mation slows down the production process. It implies slow growth of tional income. Lack of Skilled Labour and Dynamic Entrepreneurship ined personnel for new industries are not available and there is lack of trepreneurs who have investable resources and are willing to take risk. Technological Backwardness agriculture and cottage and small industries, the techniques used are ld, primitive and backward. This has reduced the level of production and us national Income. Lack of Financial Institutions Ithough there exists large number of financial institutions like Industrial inance Corporation, State Finance Corporations, Agricultural Refinance nd Development Corporation, Industrial Development bank, Commercial Banks, etc. They are unable to meet the increasing financial needs of the Indian economy. Lack of finance slows down productive activities and onsequently, national income is reduced. 5. Inequality of Wealth and Income The socio-economic, political and religious structure have widened the gap between rich and the poor. A large section of our population lives below the poverty line. They are not able to meet even their basic necessities of life. This section of population is contributing nothing to national income. 6. Joint Family System The present joint family system makes certain members of the family work shirkers and irresponsible because these members are sure to get food and lodging from the family. Idleness of these hands reduces economic production or national income. 7, Illiteracy A large proportion of Indian population is illiterate. They cannot get good jobs and this adversely affects productivity of the nation.414 8. Rapid Inc Indian populati income and standard 9, Heavy Dependence 0” ‘A large portion of our pop Population d on g continues rease in ion has crosse of livini Agriculture e billion mark. Consequently, < s to be low. 4 lation lives in rural areas and heavily on agriculture. Agriculture is seasonal and uncertain occupat rains heavily, there are floods and agricultural output falls. If j rain adequately, then also agricultural output falls. 4.5.4 Conclusion and Suggestions to Raise National Income in J; raise national income in India are designed ratify If the suggestions to a : and pursued efficiently and effectively, they can produce highly satis, macro and micro level Some suggestions to raise national results. 1 income in India are :, 1. Raise the Rate of Saving and investment People should be encouraged to save more. Savings should be inves productive activities. 2. Controlling Population Growth Serious efforts should be made to control population growth. Only the the capital income of the country can improve. My 3. Balanced Growth In Indian economy, all sectors are mutu: / ally dependent. It is i have balanced growth in all sectors, otherwise the neglected ee der the growth of other sectors. aa eloping Means of Transportation and Communication id as means of transportation and communication syst soun infrastructure and accelerate the pace of col e of developme ing Opportunities for Technical Education technical education will make manpower skilled. Technica . Technic € will contribute ie more to : 4 ional income, the productive process ol i logy e any field should be encouraged increase production, Consequettlyes in the Structure of Indian Economy Remove Illiteracy and Ignorance forts should be made to eradicate illiteracy and ignorance. ; ules for Joint Family System forts should be made to ensure that e Tesponsible enough to earn somethi tion’s productive process, More Welfare Services very major member in a joint family ing for the family and contribute to ation and health services should be provided free of cost or at nominal . This would improve human capital which is very important. Development of Banking India, banking activity should be encouraged which will increase trade d commerce. + Full Use of Natural Resources ural resources of the country which are lying idle, should be fully ploited. It will raise country’s productivity and national income. SUMMARY © Three broad sectors of our economy are: primary, secondary and tertiary sectors. There are 8 sub-sectors in our economy. The procedure of estimating Nl is complex and difficult in a developing country like India. Some difficulties in estimation of NI in India are : 1. Inadequate and unreliable data 2. Difficult differentiation between economic and non-economic activities 3. Conceptual difficulties 4. Double counting 5. Scattered and unorganised production 6. Unreliable data collecting agencies 7. No data on backward areas 8. Lack of data on subsidiary jobs. Role of Agriculture in Indian Economy Agriculture is the backbone of Indian economic system and economic activity. The role of agriculture can be clearly seen from the following: I. Agriculture constitutes significantly in national income.WORKFORCE PARTICIPATION AND CHANGES IN OCCUPATIONAL STRUCTURE IN INDIA Introduction and Basic Concepts 5.2 Size of Workforce in India 5.3 Rate of Workforce Participation in India 5.4 Self-employed and Hired Workers in India 5.5 Changes in Occupational Structure in India 5.5.1 Meaning of Occupational Structure Relationship between Economic Development and Occupational Structure 5.5.3 Changes in Occupational Structure 5.5.4 Causes of Stagnation and Suggestions for Changes in Occupational Structure ¢ Summary e Review Questions 5.1 INTRODUCTION AND BASIC CONCEPTS 1. Worker 4 worker is an individual who is doing some productive employment to earn a living. There are two types of workers : (a) Self-employed : These people work in their own business or profession and get profit as their reward. They are said to be self-employed. Self- employment is a major source of livelihood for both men and women. This category accounts for more than 50 percent of the workforce. Hired Workers : People who are hired by others and paid wages or salaries as a reward for their services are called hired workers. Hired workers can be of two types : (i) Casual workers : People who are not hired by their employers on a regular or permanent basis and do not get social security (b)zs penefits are said to be casual workers. Example ; ¢9 Ct 0 str workers (construction workers account for 33% of totay force) ii) Re lar workers : People who are hired by their emp (ii yermanent basis and get social security benefits (like peng. brid to be regular workers or salaried employees. For ¢ hartered accountants, ete. teachers, 2. Gross Domestic Product (GDP) ' Sum total of the goods and services produced in an economy during q, called GDP. A worker or an individual engaged in production iad GDP by rendering his services. contributes to the process of 3. Economic Activities ’ All activities which contribute to gross national product through prod, and services are called economic activities. (Productive of goo is a part of economic activity). 4. Workforce Persons who are engaged in economic activities are termed as workers g they constitute the workforce. Workforce is the total number of perg ally working. In other words, workers are employed persons be; get employment in various types of economic activities in an economy mployment situation in an economy depends on how many persons gy portunities to work in different economic activities. Labour Supply and Labour Force Supply refers to the amount of labour that workers are willin orresponding to a particular wage rate. Labour force refers to of people who are able to work and willing to work. Labour at from work force. Labour force includes those people who F work but cannot get work (that is, who are unemployed). Force = Workers + Number of people who are willing to work but are unemployed. ployment = No.of Unemployed Persons Labour Force x 100 Rate (or Ratio) _ WorkforceParticipation and Change 53 = It is defined as the number of People who reside in 4 particular locality at a particular point of time. It is defined as the percentage of total population which is actually Participating in productive activity. {tis also catled workers-population ratio. It indicates the employment situation of the country. A high ratio means that greater proportion of population is actively contributing to the production of goods and services of a country. SIZE OF WORKFORCE IN INDIA number of working persons constitutes the working population of a try. It depends upon many factors such as : age-composition; sex- mposition; life expectancy; definition of worker, attitude towards work: lability of work, etc. Since these factors are different in different tries, and change over time, the Proportion of persons falling in the ry of workforce differs. data on the size of workforce in India is as follows ; “41. India has workforce of about 400 million persons, a (a) Our of this, 70 percent of workforce is in rural areas (about three- fourth of this 400 million) and 30 percent is in urban areas. (b) Men form the majority of workforce in India. About 70 percent of the workers are men and 30 percent are women. (©) Women workers account for one-third of the rural workforce whereas in urban areas, they are just one-fifth of the workforce. 2. Bulk of workforce is rural based. Even if 2/3 of workforce is in rural India, they contribute very little to GDP. It shows their low productivity. Low productivity means low income and more poverty. 3. The percentage of women workers is generally low. It is more low in urban areas. It is because, in rural areas women can find work in low paid, less productive jobs. Women workers do job because of their poverty. But in urban areas, if the women is not well educated it is not possible to get a reasonably good productive job. In urban areas, doing low-paid jobs is generally not allowed to women workers, That is why, percentage of women workers is lower in urban area as compared to rural areas. It can be concluded that low employment among women is a reflection of economic backwardness of a country.OF WORKFORCE Lage a ps INTD 5.3. RATE rate of workforce participation is ie follows : 4 1. The data xe articipation for the urban bai is about 52 per (a) Rate of p tion for the rural area is about 42 per ‘ci : (b) ae ie a of participation is about 52 per cent - i 14 per cent for women. (d)_In rural areas, rate of participation is about 53 per cent and 30 per cent for women. : : 7 (©) Overall rate of participation in the country ries 40 per Participation rate in rural areas is Benes than in urban ( It is because people in rural areas have limited resources to cam income. In rural areas, many do not go to schools, colleges in training institutions. Even if some of them go, they discontin middle to join the workforce; whereas, in urban areas, a co section is able to study in various educational institutions, Y people have a variety of employment opportunities, They are bI look for an appropriate job to suit their qualifications and ski in rural areas, people cannot stay at home as they are poor. 3. Participation rate for women is higher in rural areas with urban areas : It is because in rural areas, poverty forces wome! Without education, women in rural areas find and get low wages. n to seek employme only less productive jol It can be concluded that there is under estimation of workers in our country, 5.4. SELF-EMPLOYED AND HIRED WORKERS IN INDIA 1. The data for 2015-16 is as follows (Source: Economic Survey 201 (a) Worker-population ratio = 47.8% (b) Participation rate = 50.3% () Unemployment rate = 5.0% () 47 % of workers were self employed, 8% of workers were wage employed. male workers are self-employed and 49% of male are self-employed and 45% of fWorkforce Participation and Changes .... 55 Then it is observed that: (a) Self employment is more in rural areas than in urban areas. It is because in urban areas, people are skilled and work for jobs in offices and factories. But in.rural areas, people work on their own farm. Also, non-farm job opportunities are not much, (b) Self-employment and hired employment are equally important for male workers. But female workers give preference to self-employment than to hired employment. It is because women, both in rural and urban areas, are less mobile and thus, prefer to engage themselves in self-employment. It can be concluded that self-employment is a very important source of livelihood for people in India. 2. Employment is divided into two sectors : e Formal Sector ¢ Informal Sector (a) Formal Sector: It is an organised sector which includes all public sector enterprises and private enterprises which employ 10 or more workers. The workers of this sector are called formal workers. The workers are entitled to social security benefits. The workers can form trade unions and get protected by labour laws. 15.6 per cent of the total workforce is employed in the formal sector. Informal Sector : It is an unorganised sector of an economy which includes all those private sector enterprises, which employ less than 10 workers. Example : agriculture labourers, farmers, owners of small enterprises etc. The workers of this sector are called informal workers. The workers are not entitled to social security benefits. The workers cannot form trade unions and are not protected by labour laws. 84.5 per cent of the total workforce is employed in informal sector. Owing to efforts of International Labour Organisation (ILO), Indian government has initiated the modernisation of informal sector. (b 2 Table 5.1 Share of Formal-Informal Employment Across Organised- Unorganised Sectors in 2011-12 and 2004-05 (in %) [organises | —Unorganised [Tora] 45.4 (52) 0.4 0.3) 8.1 (7.3) [informa [| sas us) | 996,09.) | 91.902) _| [row sy rep | 19 | Source:Economic Survey, 2014-15, Vol IT Note: Population projected for year 2004-05 and 2011-12 using decadal population Srowth rate between Census 2001 and 2011. Figures in brackets pretain to 2004-05._ i ined from 87% ; a hare of unorganised labour has decliné hy The shai (Table 5.1). er tional Structure sal eee ee to the distribution of working Occupations) See al Ae ee An occupation is defi i of economic nop bean oe which provides means of livelihood to those ¢ one pone of occupations in an economy Is very large— “ ee but all these occupations are usually grouped under : ls. These are: i : 7 ean sector: It includes agriculture and allied actiy : forestry, fisheries, poultry, dairy farming, ale 2 2. Secondary sector: It includes manufacturing industry both (9 ; and unorganised) and construction activity. ; 3. Tertiary sector: It includes transport, storage, communications, and commerce, etc. The number and the proportion of workers engaged in these vari sectors of an economy make up the occupational structure of that co GES IN OCCUPATIONAL STRUCTURE IN I 5.5.2. Relationship Between Economic Development and Occupational Structure Colin Clark, in his work ‘Conditions of Economic Progress’, argues t there is a close relationship between development of an economy and occupational structure. Economic progress is generally associated y certain distinct necessary and predictable changes in occupational struct He writes : “A high average level or real income per head is alway associated with a high proportion of the working population engaged tertiary industries ... low real income per head is always associated a low proportion of the working population engaged in tertiary productio and a high percentage in primary production.” A.G.B. Fisher also reaches the same conclusion. every progressive economy, and investment from the ‘es. all kinds and to a still great “We may say i there has been a steady shift of employn sential activities ... to secondary activiti er extent into tertiary production.” i Thus, there is close interlink between occupational structure of a its economic development, that is : AS a country develo;