2.

Sectors of the Indian Economy

Public and Private Sector

Sectors of Economic Activity

How do the sectors contribute to the economy?

1 of 3

How do the sectors contribute to the economy?

Sectors of the economy

1) Primary sector
• When we generate commodities by using natural resources, we are engaged in primary sector activity.
• It serves as the foundation for all other sectors.
• Because agriculture, dairy, fisheries and forestry provide most of the products in the primary sector, this sector is also known as the agriculture and allied
activities sector.
2) Secondary sector
• The secondary sector includes operations to transform natural goods into other forms through manufacturing processes.
• It uses the output of the primary sector as raw material.
• For example, sugar or jaggery is produced in the secondary sector by using the raw material sugarcane produced in the primary sector.
• Because this sector consists of various types of manufacturing industries, it is also known as the industrial sector.
3) Tertiary sector
• This sector supplies services to consumers and to the primary and secondary sectors.
• They do not generate a good on their own, but rather serve as a help or support to the manufacturing process.
• Tertiary activities include transportation, storage, communication, banking and trade.
• Because these activities produce services rather than goods, the tertiary sector is sometimes known as the service sector.

2 of 3

How do the sectors contribute to the economy?

Gross Domestic Product (GDP)

• The total value of all the goods and services produced in each sector during a given year is that sector's total output for that year.
• The total output of all three sectors together is the country's gross domestic product, or GDP.
• GDP is the total value of all final goods and services produced in a country within a given year.

3 of 3

How do the sectors contribute to the economy?

Historical changes and rise of tertiary sector

• In 2013–14, the tertiary sector surpassed the primary sector as the largest sector in India.
• The tertiary sector is vital in India for various reasons:
• Several services, such as hospitals, educational institutions and post and telegraph services, are essential for people’s welfare.
• The growth of agricultural and industrial sectors necessitates the growth of services such as transportation, trading and storage.
• As income levels rise, consumers begin to demand more services such as tourism, private hospitals and professional training.
 • Services based on information and communication technology have also become necessary over the recent years.
2. Sectors of the Indian Economy
• The service industry in India employs highly trained and educated professionals and indirectly provides livelihoods for a large number of small merchants,
repair and maintenance technicians, transport workers and many more types of skilled and unskilled workers.
Public and Private Sector

Unemployment

What is unemployment and its forms?

1 of 4

What is unemployment and what are its forms?

Unemployment
Unemployment is the condition when people who are able and seeking work cannot find work.

Underemployment
• Underemployment occurs when people work part-time or irregularly, or in occupations that do not fully use their training nor satisfy their economic
needs.
• In this situation, it is clear that everyone is working; no one is idle; yet, they are not fully productive nor earn enough.
• In contrast to someone who does not have a job and is recognised as unemployed, underemployment is hidden.
• It is also known as disguised unemployment.
• The agriculture sector in rural India suffers from disguised unemployment.
• More than half of the country's workforce are employed in the primary sector, mainly in agricultural activities, but the sector accounts for just a quarter of
the country's GDP.
• In cities, labourers such as painters, plumbers, repairmen and cart drivers may work all day but earn relatively little. They work at low pay because they
have no options.

2 of 4

What is unemployment and what are its forms?

Steps to create employment in primary sector

• Small farmers should be given loans by the government or banks to buy seeds or build irrigation systems, among other things, so that they can grow 2–3
crops per year.
• Transportation and storage infrastructure should be enhanced in order to provide more job opportunities. To create jobs, infrastructure projects such as
building new dams and canals should be undertaken.
• Technical and vocational training can help members of farming families find work outside agriculture.

3 of 4

What is unemployment and what are its forms?

Steps to create employment in secondary and tertiary sectors

• In the secondary sector, jobs can be created by developing mills, cottage industries and handcraft businesses to employ villagers.
• Establishing food processing units can absorb surplus agricultural labour.
• Investments by the government in cold storage facilities can generate jobs.
• Government can promote employment-generating services such as transportation and communication.
• To create additional jobs, multi-purpose projects should be built.
• The Planning Commission (now known as NITI Aayog) estimates that nearly 20 lakh jobs can be created in the education sector alone.
 2. Sectors of the Indian Economy

Public and Private Sector

4 of 4

What is unemployment and what are its forms?

Mahatma Gandhi National Rural Employment Guarantee Act, 2005

• In India, the central government passed a law establishing the Right to Work in around 625 districts. The Mahatma Gandhi National Rural Employment
Guarantee Act of 2005 is the name of the law (MGNREGA 2005).
• The government guarantees 100 days of employment in a year to all people who are able to and need to work in rural areas under the MGNREGA 2005.
• If the government fails to meet its obligation to create jobs, the people are paid unemployment benefits.

Division of Sectors

What is the organised and unorganised form of sector?

1 of 3

What is the organised and unorganised form of sector?

Organised sector
• The organised sector includes all businesses or places of employment where the working conditions are formally determined and employees can count on
regular salaries.
• Such businesses are registered with the government and must follow the norms and rules given in numerous laws such as the Factories Act, Minimum
Wage Act, Payment of Gratuity Act, Shops and Establishments Act.
• Advantages of employment in the organised sector for workers are:
(i) job security
(ii) fixed hours of work
(iii) overtime benefits
(iv) paid leave, travel allowances, medical benefits, safe working conditions and retirement pensions

2 of 3

What is the organised and unorganised form of sector?

Unorganised sector
• The unorganised sector is characterised by small and dispersed units that are mostly not subject to government regulation.
• There are laws and regulations in place, but they are not followed.
• Jobs are often low-paying and irregular. There is no provision for overtime, paid leave, holidays, or sick leave and other benefits.
• Employment is not assured. People can be asked to leave without giving reason.
• Employees may be retrenched when there is less work, such as during certain seasons or during economic downturn.
• Employment conditions may depend on the employer's whims rather than the worker’s performance or business needs.

3 of 3

What is the organised and unorganised form of sector?

Protection of workers in the unorganised sector
2. Sectors of the Indian Economy
Workers in the unorganised sector can be protected in the following ways:
• Farmers can be helped with timely delivery of seeds, agricultural supplies, finance, storage and marketing outlets.
Public and Private Sector
• In urban areas, government assistance for raw material procurement should be provided to casual workers.
• Small-scale industries should also be supported to obtain raw materials and market their products.

Public and Private Sector

What are the public and private sectors?

1 of 3

What are the public and private sectors?

Private sector
• Ownership of assets and delivery of services is in the hands of private persons or companies in the private sector.
• Profit is the driving force behind private-sector activities.
• To obtain goods or services, one must pay the owners.

2 of 3

What are the public and private sectors?

Public sector
• The government owns the majority of the assets and provides all services in the public sector.
• Governments raise funds through taxes and other means to cover the costs of the services they provide.
• The public sector's goal is to provide welfare to the people rather than to earn profits.

3 of 3

What are the public and private sectors?

Government’s role in the public sector

• Governments must spend money on public sector projects like building roads and bridges, generating power, and supplying irrigation through dams.
• This is to make sure that these facilities are available to everyone.
• The government must also step in to produce and provide electricity at prices that private sector enterprises can afford in order to keep their operations
going.
• Similarly, the Indian government buys wheat and rice from farmers at a fixed minimum price, stores it in godowns, and sells it to people at a fair price
through ration shops.
• In this way, the government supports the producers as well as the consumers.
2. Sectors of the Indian Economy

Public and Private Sector