Sectors of the Indian Economy

Key Concepts

• Classification of economy into sectors helps in understanding its structure and functioning.
• Three types of classification:
  • Primary, Secondary, Tertiary sectors: Based on nature of activity.
  • Organised and Unorganised sectors: Based on employment conditions.
  • Public and Private sectors: Based on ownership of enterprises.
• Importance of sectors changes over time due to economic development.

Sector Classification

Primary Sector

• Involves natural resource-based activities such as agriculture, dairy, fishing, forestry, mining.
• Also known as the agriculture and related sectors.

Secondary Sector

• Involves transformation of natural products into manufactured goods.
• Includes industries such as manufacturing, construction.

Tertiary Sector

• Provides services supporting primary and secondary sectors.
• Includes transportation, communication, banking, trade.
• Also known as the service sector.

Economic Activities and Their Interdependence

• Economic activities are divided into primary, secondary, and tertiary categories.
• Example: Cotton cultivation (primary) supports textile manufacturing (secondary), which requires transport and banking services (tertiary).
• Interdependence illustrated by scenarios affecting one sector impacting others.

Measuring Economic Output

• Gross Domestic Product (GDP): Total value of final goods and services produced.
• Sectoral contribution to GDP used to gauge economic importance.
• Gross Value Added (GVA): Adjusts GDP for taxes/subsidies, providing sectoral contribution.

Historical Shifts in Sector Importance

• Developed countries transitioned from primary to secondary and then tertiary dominance.
• Similar shifts observed in India with tertiary sector gaining prominence over time.

Employment Patterns

• Primary sector employs most people but contributes less to GDP compared to tertiary sector.
• Underemployment: Common in agriculture; more workers than needed, leading to disguised unemployment.

Addressing Employment Challenges

• Strategies to increase employment include improving agricultural productivity and infrastructure.
• MGNREGA 2005: Provides rural employment guarantee to alleviate underemployment.

Organised vs Unorganised Sectors

Organised Sector

• Formal employment with regulated working conditions.
• Includes benefits like job security, health benefits, and pensions.

Unorganised Sector

• Informal employment with unregulated conditions.
• Workers lack job security and benefits, often exploited.
• Large part of Indian workforce in this sector, needing protection.

Public vs Private Sectors

Public Sector

• Government-owned, focuses on welfare over profit.
• Provides essential services like education, healthcare, infrastructure.

Private Sector

• Privately owned, profit-driven.
• Includes companies like Tata, Reliance.

Conclusion

• Classification of sectors aids in understanding economic structure and employment.
• Emphasis on service sector growth, organised employment, and public services for balanced development.

Exercises

• Various activities and questions to apply understanding of sector dynamics in real-world scenarios.