Sector of Indian Economy
- Important Notes
- Important Questions
- All activities that give an income in return are called economic activities. Example, people going to work in factories, banks, schools, etc.
- Economic activities can be classified into different sectors on the basis of nature of work.
- Primary Sector: Goods which are produced by exploiting natural resources come under the category of the primary sector. This sector is also called agriculture and related sector, e.g. – cotton which is a natural product.
- Secondary sector : Transformation of one good into another comes under the category of secondary sector. Manufacturing is one of the important components of this sector. Example : Transformation of sugarcane into sugar.
- Tertiary sector : All production units producing services which help in the development of primary and secondary sectors come under the category of the tertiary sector. This is also known as the service sector. Example – Services given by doctors, teachers, lawyers etc.
- These three sectors are highly interdependent on one another. This can be explained with the help of an example : Farmers buy goods such as tractors, pumpsets, fertilisers (manufacturing sector) to produce agricultural goods (primary sector). This shows the dependence of the primary sector on the secondary sector. Now farmers want to sell their output. For this, they need transport facilities. It shows the dependence of the primary sector on tertiary sector.
- There are thousands of goods and services produced in an economy. We cannot add different types of goods in practice. So the value of these goods and services should be used rather adding up the actual numbers.
- Comparison can be done among these three sectors on the basis of the value of final goods and services produced.
- 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 and the sum of production in these sectors gives us the gross domestic product (GDP) of a country.
- Tertiary sector has emerged as the largest sector because it helps in the development of primary and secondary sectors.
- Several services such as hospitals, banks, insurance companies, transport, educational institutions are the basic services which are required by primary and secondary sectors for their normal functioning.
- Organised sector covers those enterprises or places of work where the terms of employment are regular. They are registered by the government and have to follow its rules and regulations. Therefore people have job security.
- Unorganised sector covers small and scattered units which are largly outside the control of the government. There are rules and regulations but they are generally not being implemented by the unorganised sector. Employment is not secure in the unorganised sector.
- In unorganised sector protection and support is required for the workers for their economic and social development. Besides getting irregular and low paid work, they also face social discrimination.
- Public sector is the sector which is owned, controlled and managed by the government. Activities in the government sector are guided by the motive of social welfare and not to earn the profit.
- In the private sector ownership of production, units is in the hands of private individuals. Activities in the private sector are mainly guided by the motive to earn a profit. Example : TISCO and RIL.
- Employment is an activity from which a person earns the means of living, i.e. income in cash or in kind.
- Unemployment refers to a situation where the persons who are able to work and are willing to work, fail to secure work.
- Underemployment is a situation in which a worker gets work for less time than the time he can work. In other words, he remains unemployed for some months is a year or some hours every day.
- There was a big change in the share of three sectors in G.D.P. (from 1973 to 2000) but data show that such similar shift has not been taken place in terms of employment.
- In secondary sector output went up by 8 times but in terms of employment it rose up by only 2.5 times.
- In tertiary sector output went up 11 times whereas employment rose up 3 times.
- Government can create more employment opportunities by providing better infrastructure such as roads, dams, canals etc. Further, this can be enhanced by providing services like banks, transport and communication.
- Set up industries that process vegetables and agricultural produce like potatoes, rice, wheat, tomato, fruits which can be sold in outside markets. This will provide employment in industries located in semi-rural areas.
- Mahatma Gandhi National Rural Employment Guarantee Programme-2005 (NREGA-2005)
- This act is implemented as “Right to Work” in all the 604 districts of India. Under this act, all those who are able to work and are in need of work have been guaranteed 100 days of employment in a year by the government. However, only one person per family is entitled to this benefit.
Q.Name the sector that is the largest employer in India. Why does this sector produce only a quarter of the National GDP?
- The average size of the land holdings is very low which results in low productivity per holder.
- Less use of modern technology and know-how among farmers to increase crop productivity.
- The systems of providing financing and marketing facilities have been insufficient since independence. The farmers are not able to get benefits fr6m the loan facilities and access to large markets.
- The absence of alternative income-generating activities in rural areas gives rise to disguised unemployment where the efficient labor force is not used to its optimum.
|There are several necessities of common man, but it is not possible for the private sector to provide all these things at a reasonable cost. For example, water and electricity are the basic needs of everyone. If the work of providing these are given to the private sector then the latter can exploit this opportunity by selling the same at high rates. Therefore the supply of basic amenities is given to the government so that it provides these facilities to the people at low and affordable rates, ensuring the smooth and uninterrupted supply to the public.
Q. What constitutes the unorganized sector in urban areas? Why do workers in this area need protection?
A. In the urban areas, unorganized sector comprises mainly small-scale industry, casual workers in construction, trade, and transport, street vendors, head-load workers, garment makers, ragpickers, etc. All these workers constitute the unorganized sector in urban areas.
A majority of workers in the unorganized sector are from scheduled castes scheduled tribes and backward communities. Workers in unorganized sector urban areas need protection because, besides getting the irregular and low- paid work, these workers also face social discrimination. They are looked down upon by the people in urban areas. Protection and support to the unorganized sector workers are thus necessary for both economic and social development.
Q. How does the service sector help in the development of primary and secondary sectors?
A. After primary and secondary sectors, there is a third sector called the service sector also known as a tertiary sector. Activities that fall under the service sector help in the development of the primary and secondary sectors by not directly producing a good but helping these sectors by activities that are an aid or a support for the production process.
Q. With the example of sugar cane, explain the interdependence of all the three sectors of the economy.
A. Primary Sector: Cultivation of Sugarcane
|Secondary Sector: Processing of sugarcane to make sugar
So, the process starts when the sugar is cultivated. Since cultivation is part of agriculture, it comes in the primary sector. After the cultivation, the sugar cane is processed to make sugar in the factories, which is an industrial process and thus comes in the secondary sector. After which, the sugar is transported to various markets, where it is sold by retailers and wholesalers which is part of the tertiary sector.