2. The Indian economy can be classified into various sectors on the
basis of ownership, working conditions of the workers and the
nature of the activity being performed.
On the basis of nature of activity Indian economy can be classified
into primary, secondary and tertiary sectors.
On the basis of working conditions economy can be classified into
organized and unorganized sectors.
On the basis of ownership Indian economy can be classified into
Public and Private sectors.
3. The primary sector, where
economic activity is centered from
extraction of raw materials from
mother earth, be it agriculture,
forestry, fishing, mining or
quarrying.
In India, agriculture is the biggest
example of the primary sector.
However, forestry and fishing can
also be cited as other examples of
this particular sector.
This sector is also known as
agriculture and related sector.
4. When the main activity involves
manufacturing then it is the secondary
sector. All industrial production where
physical goods are produced come under
the secondary sector.
In the secondary sector of the national
economy, natural ingredients are used to
create products and services that are
consequently used for consumption. This
sector can be regarded as one that adds
value to the products and services on offer.
The major examples of this sector are
manufacturing.
This sector is also known as industrial sector
5. When the activity involves
providing intangible goods
like services then this is part
of the tertiary sector.
Financial services,
management consultancy,
telephony and IT are good
examples of service sector.
Like the secondary sector it
also provides value addition
for a product.
This sector is also known as
service sector.
6. During early civilization all economic activity was in primary sector.
When the food production became surplus people’s need for other
products increased. This led to the development of secondary sector.
The growth of secondary sector spread its influence during industrial
revolution in nineteenth century.
After growth of economic activity a support system was the need to
facilitate the industrial activity. Certain sectors like transport and
finance play an important role in supporting the industrial activity.
Moreover, more shops were needed to provide goods in people’s
neighbourhood.
Ultimately, other services like tuition, administrative support
developed.
7. To understand this interdependency, let us take an example of a cold drink.
A cold drink contains water, sugar and artificial flavor. Suppose if there is no
sugarcane production then procuring sugar will become difficult and costly
for the cold drink manufacturer. Now to transport sugarcane to sugar mills
and sugar to the cold drink plant needs the services of a transporter. A
person or system of persons is required to maintain and monitor all these
movements of goods from farm to factory to shop in different locations. That
is where role of administrative staffs comes. Let us go back to the farmer.
He also needs fertilizers and seeds which is processed in some
factory and which will be delivered to his doorstep by some means of
transportation. To top it all at every step of these activities we require the
proper monetary and banking system. So, in a nutshell this describes how
interrelated all sectors of an economy are.
9. How do we count the various goods and
services and know the total production in
each sector?
The values of goods and services is used rather than adding the actual
number to know the total production. For example, if 10,000 kgs of
wheat is sold at Rs. 8 per kg , the value of wheat be Rs. 80,000. The
value of 5,000 coconuts at Rs.10 per coconut will be Rs. 50,000.
Similarly, the value of goods and services in the three sectors are
calculated and then added up. Remember, there is one precaution one
has to take. Not every good that is produced and sold needs to be
counted. It makes sense only to include the final goods and services.
Take, for instance, a farmer who sells wheat to a flour mill for Rs.8 per
Kg. The mill grinds the wheat and sells the flour to a biscuit company
for Rs. 10 per kg. The company uses the flour and things such as sugar
and oil to make four packets of biscuits. It sells biscuits to the
consumers for Rs 60 (Rs 15 per packet).
10. •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 sum of production in three sectors gives GDP of
the country.
•It is the value of all final goods and services
produced within the country during a particular
year.
•It shows how big the economy is.
12. The graph shows that share of agriculture decreased substantially
and that of industry remained static and share of services grew.
Particularly the growth of share of services sector was phenomenal
from 35% to 55%.
13. The share in providing employment was not in tune with the share in GDP. The
agriculture provided employment to 75% workers and this decreased to 60% in
2000, which is not as big a drop as agriculture’s drop in GDP contribution. On the
other hand the growth in employment provided by other two sectors was
substantially low.
14. 1. Majority of people are still employed in agricultural activities. As
agriculture provides seasonal employment during cropping season
so chances of hidden employment are big. Moreover, as history
suggests a developed nation’s dependency shifts from primary
sector towards tertiary sector in all aspects of economic
development, so it can be said that India is still way behind
because majority still depend on agriculture.
2. Secondary and Tertiary Sector have failed to generate enough
employment opportunities making a pressure on primary sector.
Although educated and skilled workforce do get employed in
secondary and tertiary sector but for unskilled and semi-skilled
workers there is still shortage of employment avenues.
15. The sector which carries out all activity through
a system and follows the law of the land is called
organized sector. Moreover, labour rights are
given due respect and wages are as per the
norms of the country and those of the industry.
Labour working organized sector get the benefit
of social security net as framed by the
Government. Certain benefits like provident
fund, leave entitlement, medical benefits and
insurance are provided to workers in the
organized sector.
These security provisions are necessary to
provide source of sustenance in case of
disability or death of the main breadwinner of
the family. Otherwise the dependents will face a
bleak future.
16. The sector which evade most of the
laws and don’t follow the system come
under unorganized sector. Small
shopkeepers, some small scale
manufacturing units keep all their
attention on profit making and ignore
their workers basic rights.
Workers don’t get adequate salary and
other benefits like leave, health
benefits and insurance are beyond the
imagination of people working in
unorganized sectors. For example,
people domestic helpers or worker at
local grocery shop.
17. Companies which are run and financed by the Government comprise the
public sector. After independence India was a very poor country. India
needed huge amount of money to set up manufacturing plants for basic
items like iron and steel, aluminum, fertilizers and cements. Additionally
infrastructure like roads, railways, ports and airports also require huge
investment. In those days Indian entrepreneur was not cash rich so
government had to start creating big public sector enterprises like SAIL
(Steel Authority of India Limited), ONGC(Oil & Natural Gas Commission).
18. The private sector is that part of
the economy, sometimes referred
to as the citizen sector, which is
run by private individuals or
groups, usually as a means of
enterprise for profit, and is not
controlled by the state .
The private sector employs most of
the workforce in some countries.
The private sector is legally
regulated by the state. Businesses
within one country are required to
comply with the laws in that
country.
19. •It is a situation where people are apparently
working but all of them are made to work less
than their potential.
•If few people move out, it will not effect the
production.
•It is hidden in contrast to the open
unemployment where a person is clearly or
visibly without job.
•For Example- there are thousands of casual
workers in service sector in urban areas as
painters, plumbers, etc.
20. •Each one is doing some work but no one is fully employed. This is
the situation of underemployment, where people are apparently
working but all of them are made to work less than their potential.
This kind of underemployment is hidden in contrast to someone
who does not have a job and is clearly visible as disguised
unemployment.
•We see people of the service sector on the street pushing a cart or
selling something where they may spend the whole day but earn
very little. They are doing this work because they do not have better
opportunities.
•There are lakhs of farmers in India and even if we remove a lot of
people from agricultural sector and provide them with proper work
elsewhere, agricultural production will not suffer.
21. •National Rural Employment Guarantee Act
2005 (NREGA 2005).
•It is started by central government
•Under NREGA 2005, all those who are able
to, and are in need of, work 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.
•The types of work that would in future help to
increase the production from land will be
given preference under the Act.