ECONOMICS

SECTORS OF INDIAN ECONOMY

Sectors of Economic Activities

Sector defines a large segment of the economy in which businesses

share the same or a related product or service.
When we produce goods by extraction and collection of natural
resources, it is known as the primary sector. E.g., Farming, forestry,
hunting, fishing and mining.
The secondary sector covers activities in which natural products are
changed into other forms through ways of manufacturing. It is the next
step after the primary. Some manufacturing processes are required
here. It is also called the industrial sector. For example, using cotton
fibre from the plant, we spin yarn and weave cloth. Using sugarcane as
raw material, we make sugar or gur.
The tertiary sector includes activities that help in the development of the
primary and secondary sectors. These activities, by themselves, do not
produce a good, but they are an aid or support for the production
process. It is also called the service sector. Example: Teachers, doctors,
washermen, barbers, cobblers, lawyers, call centres, software
companies, etc.
Comparing the 3 Sectors
The value of final goods and services produced in each sector during a
particular year provides the total production of the sector for that year.
The sum of production in the three sectors gives the Gross Domestic
Product (GDP) of a country. GDP is the value of all final goods and
services produced within a country during a particular year. It shows how
big the economy is. In India, the task of measuring GDP is undertaken
by a central government ministry.
The graph below shows the production of goods and services in the
three sectors.
In the year 2013-14, the tertiary sector emerged as the largest producing
sector in India, replacing the primary sector. The tertiary sector has
become important in India because of the following reasons:
Services such as hospitals, educational institutions, post and telegraph
services, police stations, courts, village administrative offices, municipal
corporations, defence, transport, banks, insurance companies, etc., are
considered basic services and are necessary for all people.
The development of agriculture and industry leads to the development of
services such as transport, trade, storage, etc.
With the rise in the income of people, they start demanding more
services like eating out, tourism, shopping, private hospitals, private
schools, professional training, etc.
Over the past decade, certain new services based on information and
communication technology have become important and essential.

Where are Most People Employed?

Primary Sector Secondary Sector Tertiary Sector
More than half of the workers in India These sectors employ less than half the
are working in the primary sector, people as compared to the primary
mainly in agriculture. sector.
It contributes to only a quarter of the These sectors produce four-fifths of the
GDP. product.

How to Create More Employment?

Employment can be given to people by identifying, promoting and
locating industries and services in semi-rural areas.
Every state or region has the potential for increasing the income and
employment for people in that area.
It can be done by tourism, or regional craft industry, or new services like
IT. A study conducted by the Planning Commission (known as NITI
Aayog) estimates that nearly 20 lakh jobs can be created in the
education sector alone.

Mahatma Gandhi National Rural Employment Guarantee Act

(MGNREGA) 2005
The central government in India made a law implementing the Right to
Work in about 625 districts of India, which is called the Mahatma Gandhi
National Rural Employment Guarantee Act (MGNREGA) 2005. Under
MGNREGA 2005, all those who are able to and are in need of work in
rural areas are guaranteed 100 days of employment in a year by the
government. If the government fails in its duty to provide employment, it
will give unemployment allowances to the people.

Division of Sectors as Organised and Unorganised

Organised Sector Unorganised Sector

It is a sector where the employment terms are The unorganised sector is
fixed and regular, and the employees get characterised by small and
assured work. scattered units, which are
largely outside the control of
the government.
They are registered by the government and There are rules and regulations
have to follow its rules and regulations, which but these are not followed since
are given in various laws such as the Factories they are not registered with the
Act, Minimum Wages Act, Payment of Gratuity government.
Act, Shops and Establishments Act, etc.
The job is regular and has fixed working hours. If Jobs are low-paid and often not
people work more, they get paid for the overtime regular.
by the employer.
Workers enjoy the security of employment. Employment is not secure.
People can be asked to leave
without any reason.
People working in the organised sector get There is no provision for
several other benefits from the employers, such overtime, paid leave, holidays,
as paid leave, payment during holidays, leave due to sickness, etc.
provident fund, gratuity, etc.
People get medical benefits. The factory There are no such facilities in
manager has to ensure facilities like drinking the unorganised sector.
water and a safe working environment. When
they retire, these workers get pensions as well.
Examples of the organised sectors are Examples of the unorganised
Government employees, registered industrial sectors are Shopkeeping,
workers, Anganwadi workers, village health Farming, Domestic works,
workers, etc. Labouring, Rickshaw pulling,
etc.

How to Protect Workers in Unorganised Sector?

There is a need for protection and support of the workers in the

unorganised sector. Here are a few points which will help in doing so.
The government can fix the minimum wage rate and working hours.
The government can provide cheap loans to self-employed people.
Government can provide cheap and affordable basic services like
education, health, food to these workers.
The government can frame new laws which can provide provisions for
overtime, paid leave, leave due to sickness, etc

Sectors in Term of Ownership: Public and Private Sectors

Public Sector Private Sector

In the public sector, the In the private sector, ownership of assets and
government owns most of the delivery of services is in the hands of private
assets and provides all the individuals or companies.
services.
Railways or post office is an Companies like Tata Iron and Steel Company
example of the public sector. Limited (TISCO) or Reliance Industries
Limited (RIL) are privately owned companies.
The purpose of the public sector is Activities in the private sector are guided by
not just to earn profits. Its main the motive to earn profits.
aim is public welfare.

Responsibilities of Government
There are a large number of activities which are the primary
responsibility of the government. Here, we have listed a few of them:
Government raises money through taxes and other ways to meet
expenses on the services rendered by it.
Governments have to undertake heavy spending such as the
construction of roads, bridges, railways, harbours, generating electricity,
providing irrigation through dams, etc. Also, it has to ensure that these
facilities are available for everyone.
There are some activities which the government has to support to
encourage the private sector to continue their production or business.
The government in India buys wheat and rice from farmers at a ‘fair
price’ and sells them at a lower price to consumers through ration shops.
In this way, it supports both farmers and consumers.
Running proper schools and providing quality education, health and
education facilities for all are some of the duties of the government.
The government also needs to pay attention to aspects of human
development such as the availability of safe drinking water, housing
facilities for the poor, food and nutrition, and taking care of the poorest
and most ignored regions of the country.