Sectors of Indian economy
Economy:
It is the system according to which the money, industry, and
trade of a country or region are organized.
Activities that generate some income-economic activity.
Activities are classified into various groups which are known
as sectors.
Sector of Economic Activities
The activities which are undertaken with the objective to
earn money are called economic activities
Some of these activities produce goods and other product
services
Activities are classified in various groups which are known
sectors. Major sector of economic activities are:
Primary, Secondary and Tertiary sector
Organized and Unorganized
Public Sector and Private Sector
Primary, Secondary and Tertiary sector
a) Primary Sector:
This sector of the economy involves conversion of natural
resources into primary products. Thus, this sector is directly
associated with nature.
This includes agriculture, forestry, fishing, mining and
extraction of oil and gas. Since most of the natural products are
obtained from agriculture, dairy, fishing, forestry, etc. It is also
called agricultural and related sector.
b) Secondary Sector:
This sector covers activities in which natural products are
changed into other forms through manufacturing.
The manufacturing may take place in a factory, workshop or
at home. Examples are, yarn and cloth weaving from cotton
fiber, sugar or gur from sugarcane, etc.
c) Tertiary Sector:
The activities that help in the development of primary and
secondary sectors are covered in tertiary sector.
These activities do not produce goods, but they provide or
generate services that support the production process e.g.
transport, storage, communication, banking, etc. thus also
known as service sector.
This sector also includes some essential services provided by
professionals. doctors, lawyers, teachers, barbers, etc. and
information technology such as software industry', internet
cafe, ATM booths and call centers.
Comparing the Three Sectors
Primary, Secondary and Tertiary sectors are compared on the
basis of people working in them and amount of goods and
services produced.
Goods and Services are of two types:
a) Final Goods and Services: Final Goods and Services Those
goods and services that are directly consumed by the
consumers and are not meant for further production or
processing.
b) Intermediate Goods and Services: Intermediate Goods
and Services Those goods and services that are used for
further production or processing.
Gross Domestic Product
Gross Domestic Product (GDP) of a country is the sum of the
value of all final goods and services produced in all the three
sectors in a particular year. It shows the total production in a
country. The task of estimating the GDP in India is undertaken
by the Central Government Ministry
For e.g.: a farmer sells wheat to a flour mill at 8 per kg. Flour
mill grinds the wheat and sells to biscuit company for 10 per
kg. Biscuit company adds sugar and oil to flour to make 4
packet of biscuit and sells to consumers at 60 (15 per pack). In
this example, biscuit is final good and flour, sugar oil, service of
flour mill are intermediate.
Historical change in Sectors
Primary sector was most important sector in initial stages of
development. With new methods of farming, more food was
produced.
People started working in industries and secondary sector
gained importance
This led to start of different services like transport, banking,
health, education. At present tertiary sector most important in
terms of production and employment.
Rising Importance of tertiary Sector:
Tertiary sector has replaced the primary sector as largest
producing sector.
The reasons for this are
Demands for basic services like hospitals, educational
institutions, postal services, police station, banks, insurance
companies, administrative offices, defense, etc. have
increased.
Greater development in Primary and Secondary sector has
induced demand for service sector growth like transport,
trade, storage, etc.
With the rise in income, certain services are demanded like
tourism, shopping, private hospitals, professional training,
etc. which enhanced service sector
Due to globalization, certain new services have entered
Indian market like information technology and
communication technology which have become important
and essential.
However, not all of the service sector is growing Explain
equally. Services that employ highly skilled and educated
people are growing. But large part of service sector that
employs small shopkeepers, repair persons, transport
persons is not growing efficiently.
Employment of People in different Sectors
Employment:
More than half of working population are engaged in primary
activities, mainly agriculture. Therefore, more people work
than actually needed so everyone works less than their
capacity and also earns less. This is called underemployment
or disguised unemployment.
Underemployment also occurs in urban areas. There are
thousands of casual workers like plumbers, painters, repair
workers, odd job craftsmen, carpenters, etc. who search for
daily employment in the towns and cities.
Creating More Employment:
It is essential to generate more employment opportunities and
reduce unemployment in agricultural sector. This can be done
by the following ways:
Focus on Bank Credit Banks can provide loan to areas small
farmers for buying seeds, fertilizers, equipments, pump sets,
constructing wells for irrigation. This enables them to grow
two or more crops thereby increasing their earnings
Generating Employment Creating employment in
construction of dams and canals, making or betterment of
rural roads, developing storage facilities, etc.
Focus on Small Scale Industries Setting up small industries in
semi-rural areas like rice mill, dal mill, honey collection
centers, cold storage, food processing industries, etc
Creating jobs in health and education sector by opening
more dispensaries, schools in rural areas along with
encouraging tourism.
According to NITI (National Institution for Transforming India)
Aayog, education sector has potential of generating 20 lakh
jobs and tourism sector has potential of generating more
than 35 lakh jobs.
NREGA 2005
National Rural Employment Guarantee Act (NREGA) was
formulated in 2005 and launched by the Prime Minister on
2nd February, 2006.
Later on, its name changed to Mahatma Gandhi National
Rural Employment Guarantee Act (MGNREGA).
The main features of the scheme are:
It targets people suffering from poverty in the rural areas.
The scheme guarantees 100 days (recently amended to
150 days in drought-hit areas) of wage employment in a
year to every household in 625 districts of the country.
The Gram Panchayat, after proper verification, will
register households and issue job card to them.
This act is also called as Right to Work because if the
government fails in its duty to provide employment, it will
give unemployment allowances to the people.
Division of sectors
On the basis of the working conditions or how people
are employed, economic activities are divided into
organized and unorganized sectors:
Organized Sector:
It covers those enterprises or places of work where workers
are given regular employment.
The enterprises are registered by the government and follow
the rules and regulations such as Factories Act, Minimum
Wages Act, Payment of Gratuity Act, Shop and Establishment
Act, etc.
Workers have job security, work for a fixed number of hours
paid better wage and benefits like provident fund, medical
leaves, paid holiday, etc.
The management ensures good working condition like clean
drinking water and a safe working environment.
Unorganized Sector:
This sector is characterized by small and scattered units
which are unregistered and do not follow governmental rules
and regulations.
Workers get lower wages and are not given facilities like paid
holidays or paid leave due to sickness, etc.
Working conditions are poor and there is no job security, so
employment is irregular.
Protection of Workers in Unorganized Sectors
There are many groups of vulnerable people who need
protection in the unorganized sector. People are often
exploited, paid low, Irregular jobs and face social
discrimination.
They can be protected in following ways:
In rural areas, farmers can be supported through adequate
facility for timely delivery of seeds, agricultural Inputs, credit,
storage and marketing outlets.
Following are a few ways to protect the workers of the
unorganized sector from exploitation:
1. The government can fix minimum wages;
2. The government should provide specific working hours;
3. The government can enact new laws on overtime and salary range;
4. Provide cheap loans with low-interest rates; and
5. Open small-scale industry
Sectors in Terms of Ownership
The economic activities can also be classified on the basis of
ownership which means who owns the assets and who is
responsible for delivery of services. On the basis of ownership,
there are two sectors of the economy i.e. public sector and
private sector.
Public and Private Sector:
Public Sector: In the public sector, government owns most of
the assets and provides all the services, therefore it is also
called state sector or government sector, e.g. Indian Railways,
Bharat Heavy Electricals Limited, etc. Motive-Social welfare.
Private Sector: In the private sector, ownership of assets and
delivery of services is in the hands of individuals or private
companies, e.g. Reliance Industries Limited (RIL), TISCO, etc.
Motive of private sector is to earn profits.
Role of Public/Government Sector
Developing infrastructure which is done by developing,
communication, heavy industries, building bridges, roads and
railways, dams, generating electricity.
Encouraging private sector to open industries and generate
employment.
Support farmers by buying food grains at a fair price and
supports poor people by supplying food grains at low price in
ration shops.
Provides health care facilities and education in backward and
rural areas especially elementary education
Dealing with problems of malnutrition, high infant mortality
rate, unsafe drinking water, lack of housing, food and
nutrition, etc.
