SECTORS OF INDIAN ECONOMY

By MITEN SHAH SIR

• WHAT IS ECONOMICAL ACTIVITIES??

 Those activities which are performed to generate income are called economic activities.

 CLASSIFICATION OF ECONOMIC ACTIVITY: -

ON THE BASIS OF
EMPLOYMENT
CONDITION ON THE BASIS OF
Primary OWNERSHIP

Organised • PUBLIC SECTOR

ON THE
BASIS OF sector • PRIVATE SECTOR
NATURE OF
ACTIVITY • CO-OPERATIVE
• JOINT VENTURES
Secondary Tertiary Unorganise
d sector
 PRIMARY SECTOR: -

• Directly connected to nature.

• Ex. Agriculture, Mining, Dairy, Fishing, Forestry, etc…

• When we produce something by exploiting natural resources it is an activity of the primary sector.

• It provide the base for all other products.

• Ex. Tyers , T-Shirts, etc….

• This sector is also called agriculture and related sector.

 SECONDARY SECTOR: -

• It includes those activities in which we change the product of nature into a new form.

• Ex. Cotton to cloth, sugarcane to sugar, car, paper, etc……

• Also known as industrial sector.

• When natural product are change in to other form through manufacturing it is an activity of the secondary sector.
 TERTIARY SECTOR: -

• It includes activities that help in the development of primary and secondary sectors.

• Ex. Transport, Bank, Teacher, Doctor, Lawyer, etc….

 COMPARING THE THREE SECTOR:-

 How to know that how much production done in all three sector???

• We know it by using GDP(Gross Domestic Product).

What is GDP??

• We understand it by an example,

PRODUCE BUISCUIT
SELL TO
SELL IN 50 RUPEES
SELL IN 20 RUPEES

WHEAT PRODUCE BY FARMERS BUISCUIT MAKING INDUSTRY

FINAL GOODS
(PRODUCING COST 15 RUPEES) (PRODUCING COST 15 RUPEES)
M.R.P: 50 RUPEES

INTERMEDIATE GOODS
 GDP:-
• When we calculated the production of each sector we only aadded the value of final goods rather than intermediate goods.

• Value of intermediate goods are already include in final goods value

• Definition: The value of final goods and services produced within the country during one year is called GDP.

• HIGH PRODUCTION > HIGH GDP

• LOW PRODUCTION > LOW GDP

• India has the 5th largest GDP in the world

• U.S.A has the largest GDP in the world

• In India GDP measured by ministry of Indian govt.

 Historical change in sectors:-

• At initial stages of development, primary sector was the most important sector of economic activity.

• As the methods of farming changed and agriculture sector began to prosper. It produced much more
food than before. Many people could now take up other activities.

• Over a long time (more than hundred years), and especially because new methods of manufacturing
were introduced, factories came up and started expanding. Those people who had earlier worked on
farms now began to work in factories in large numbers.

• People began to use many more goods that were produced in factories at cheap rates. Secondary
sector gradually became the most important in total production and employment.

• Hence, over time, a shift had taken place. This means that the importance of the sectors had
changed.

• In the past 100 years, there had been a further shift from secondary to tertiary sector in developed
countries.

• The service sector has become the most important in terms of total production. Most of the working
people are also employed in the service sector.

This is the general pattern observed in developed countries.

RISING IMPORTANCE OF THE TERTIARY SECTOR OF PRODUCTION :-

• Over the 40 years while production in all the three sector has increased but it has increased the most in the
tertiary sector.

• 1973 - 1974
 40% of GDP – primary sector
 13% of GDP – secondary sector
 47% of GDP – tertiary sector

• 2013 - 2014
 14% of GDP – primary sector
 19% of GDP – secondary sector
 67% of GDP – tertiary sector

 WHY TERTIARY SECTOR RISING?

 Some services are basic services.
 Ex. Hospital, schools, police station, courts, banks, etc…
 In a developing country the govt. has to take responsibility for the provision of these services.
 The development of agriculture and industrial sector leads to the development of service sector.
 As the income level rise, some people demanding many more services like eating out, shopping, traveling,
private schools, etc..
 Over the past decade, services based on information and communication technology have become
important and essential.
IN WHICH SECTOR MORE PEOPLES ARE EMPLOYED?

• 1977- 1978
 71% - primary
 11% - secondary
 18% - tertiary

• 2017-2018
 44% - primary
 25% - secondary
 31% - tertiary

 More people employed in the primary sector but they contribute less in production why??
 Underemployment/ disguised unemployment

 How to create more employment?

 Government can provide cheap loans to small farmers. By these things, they can do multiple
cropping to remain employed over year.
 Government can construct new dams and canals. By these things many labours are engaged with
this construction works and get employment.
 Government invest on transportation network and road construction.
 Government can setup small scale industries in rural areas.
 Government can promote tourism.
 Government can invest on health and education sector.
 MNREGA

 Started in 2005.
 Government provides right to work
 This program was launched in 625 district.
 Government promises to provide minimum 100 days employment in rural areas.
 If the govt. fails to provide employment, it will give unemployment allowances to the people.
 ORGANISED SECTOR
• Registered by govt.
• Rules and regulation are followed
• Job security
• Paid holidays
• Fixed working hours
• Good working conditions
• Pension on retirement
UNORGANISED SECTOR
• Not Registered by govt.
• Rules and regulation are not followed
• No Job security
• No Paid holidays
• No Fixed working hours
• Poor working conditions
• No Pension on retirement
Why don’t all the people start working in the organised sector?

 Huge shortage of jobs in the organised sector.

 To work in this sector, it is necessary to have good knowledge or good skills.

 How to protect the workers of unorganised sector?

 In rural areas:
• Landless agriculture labourers, small and marginal farmers, artisans, etc…
• govt. protect them by providing seeds, agriculture inputs, provide loans, storage facilities, etc…

 In urban areas:
• Small-scale industries workers, construction site workers, trade and transport, street vendors, garment makers, etc…
• Govt. protect them by providing raw materials, marketing, by making laws and policies.
• As per observation SC & ST caste people work the most in the unorganised sector.
• It becomes necessary that the govt should ensure that there is no discrimination with them.
 PRIVATE SECTOR PUBLIC SECTOR
• Owned by an individual or a group. • Owned by government.
• Only motive to earn profit. • Only motive to serve people.
How does govt. provide us all this?

• The govt. provides these service free of cost or at a very low price.
• Government takes tax from us, that’s why govt take responsibility to provide us all these services.

 Private sector cant able to provide these all because its not a work of any individual or a one group due to high
investment.
 There is no gurantee that they provide these all at low price.
 So it is the responsibility of the govt. to provide these basic services.

 Private sector also dependent on public sector because without basic service no one can established industries or
company.
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