Sectors of the Indian Economy

Sectors
/ Definition & Points Other Names Examples

- Goods produced by exploiting natural

resources - Base for all other products Agriculture and Agriculture Dairy Fishing Mining
Primary
we make - Depend a lot on natural Allied Activities Forestry
factors
- Activities associated with manufacturing
Cotton → Clothes Mud/Earth →
Secondary products from raw materials used by Industrial Sector
Bricks
primary sector
- Activities that help in the development
of primary and secondary sectors - Transport Storage Communication
Includes others, which do not directly Banking Trade Internet Cafe ATM
Tertiary Service Sector
help in production of goods: {Teachers, Booths Call Centre's Software
Doctors, Professional Services, Companies
Administrative and Accounting Workers}

Comparison of Sectors
‘Values’ of final goods and services are a good criterion to compare the different sectors on.
Value of the final goods and already includes the value of all the intermediate goods that are used in
making the final good.

Gross Domestic Product (GDP) is the sum of the value of all final goods and services produced in
all the three sectors during a particular year.

It is the value of all final goods and services produced within a country during a particular year.

Measuring GDP → Central Government Ministry

Historical Change
Initial Stages of Development → Primary was Largest
Gradually, Secondary became most important in total production and employment due to the shift of
people from farms to factory workers etc.
Further along the timeline, Tertiary Sector has been the most important in terms of total production. More
people are also employed in the service sector.

Sectors in India
Production has increased the most in the tertiary section → service sector overtook primary as the largest
producing sector.

Reasons

1. Requirement of Basic Services:

Hospitals, Educational Institutions, Communication Services, Police, Courts, Administrative
Institutions, Financial Institutions, Transport, Defence

Sectors of the Indian Economy 1

 2. Development of Agriculture Industry:
→ Development of Transport, Trade, Storage etc.
Greater Development for Primary and Secondary Sectors → Greater demand for services of tertiary
sector

3. Rising Income Levels:

Demand for Leisure ⬆→ More such services

4. Information and Communication Technology

More demand for such services.

Employment

1. Skilled Workers ← Limited in Number

2. Daily-Wage Workers ← Large Number of such Workers

Only a part of the tertiary sector is growing in importance.

Primary Sector → Largest Employer

NOT because not enough jobs were created, instead is because most people are in the agriculture sector.

More than half of the workers → Primary Sector {Agriculture} : Contributes 1/6th of GDP.
More people in Agriculture than is necessary.

Workers in Agriculture Sector → Underemployed.

Everyone is working, no one remains idle, but their labour effect gets divided.
People work less than their potential.
Disguised unemployment occurs when there are more people working on a task or job than actually
needed, resulting in low or zero productivity for some of the workers.

“Disguised unemployment refers to a situation where individuals appear to be employed, but their
marginal productivity is zero or negligible.”

Can also occur in other sectors:

Casual Workers (Electricians, Plumbers, Woodcutters etc.) in Service Sector

Generate Employment
Ways to Generate Jobs in Primary Sector

1. Infrastructure Development
Irrigation Facilities → Employment in Agriculture Sector

2. Cheap Agricultural Credit

Credit with Low Interest

3. Cold Storage
Store & Sell with High Prices

4. Local Collection Centres

Dairy and Honey Collection Centres in Rural Areas

5. Industries/Processing Units
Employment for in Rural areas as workers

Sectors of the Indian Economy 2

 NITI Aayog study → 20 lakh jobs in education sector ← To teach the children currently not in educational
insitutions.
Tourism Sector → 35 lakh jobs.

Right to Work: Mahatma Gandhi National Rural Employment Generation Act 2005 (MGNREGA
2005)
All those who are able and are in need of work in rural areas, are guarantied 100 days of work by the
government.
Failure to provide this → unemployment allowances.

Organised VS. Unorganised

/ Organised Unorganised

Registered with Government & Have to follow Rules and

Regulations in various laws & acts: {Factories Act, Minimum ✅ ❌
Wages Act, Payment of Gratuity Act etc.}
Terms of Employment ✅ ❌
Regular Payment ✅ ❌
Job Security ✅ ❌
Medical Benefits, Paid Holidays, Provident Fund, Gratuity
(While Retirement)
✅ ❌
Safe Clean Working Environment, Drinking Water and
Similar Facilities
✅ ❌
Street Workers
Government Workers Workers in
Daily Wage
Examples Institutions People in Government
Workers Most
Registered Institutions
Farmers

How to Protect Workers

Note: Common to find organized sector enterprises in unorganized sector → evade taxes and refuse to
follow laws that protect labourers.

Who needs Protection

Rural Areas

1. Landless Agricultural Labourers

2. Sharecroppers and Artisans (weavers, blacksmiths, carpenters, goldsmiths) ← 80% of rural

households

Urban Areas

1. Casual Workers (Construction, Trade, Transport etc.)

2. Small Scale Industries

Workers from SC, ST and OBC → Mostly in unorganised sector ← + social discrimination.

Public VS. Private

Public Sector ← Government
{Railways, Post Office}

Sectors of the Indian Economy 3

 Goal: Profit and Services to Public
Private Sector ← Private Individuals / Companies
{TISCO: Tata Iron and Steel Company Limited, RIL: Reliance Industries Limited}
Goal: Profit

Things needed by the society as a whole cannot be done by private companies → have to be undertaken
by government.

[SEE TEXTBOOK; PG34; 2ND PARAGRAPH] Government has to support and bear part of the cost to
encourage and sustain private sector businesses (electricity, buying rice and wheat at fair price from
farmers).

Government must take responsibility: Healthcare Facilities & Educational Institutions; Nutrition Facilities,
Safe Drinking Water, Housing Facilities

Sectors of the Indian Economy 4