SUPPORT STUDY MATERIAL

                              Sectors of the Indian economy

 1. Sectors on the                      2.on the basis of                         3.on the basis of

     Basis of nature of                       terms of                                      ownership

      Economic activities                 employment

1.Sectors on the basis of nature of economic 

   activities: the economy is classified into primary sector ,secondary sector and   

    tertiary sector

   (A) Primary sector: Activities that are directly related to natural resources are 

                                      termed as primary activities

           For example : cultivation of wheat depends on natural factors ,Hence the   

           product produced mainly with the help of natural resources is termed as  

             natural product,

           Dairy product(depends on biological process)

           It is primary  because it form the basis of all other products to be   

           produced in the economy. These goods are used for further production

           It is also known as agriculture and related sectors

           In India primary sectors include activities related to agriculture ,forestry     

           fishing ,mining and quarrying

   (B).Secondary sector: Activities which transform natural or primary products into      

         some manufacturing products are termed as secondary activities or industrial

        activities.The process of manufacturing may be performed in a factory ,a     

          workshop of at home .For example : production of cloth from cotton, flour and  

           bread from wheat , sugar and gur from sugarcane etc.

         Manufacturing activities are normally associated with different kinds of industries     

        ,It is also termed as industrial sectors

         In india activities related to manufacturing, construction, electricity ,gas and water

          supply.

    (C).Tertiary sector: Activities which provide support services to primary and    

           secondary activities are termed as tertiary activities .

           The tertiary sector is also called service sector

          For example : teacher , doctor , lawyer accountants.

          These services establish a link between producer and consumers .

          In India tertiary sector include  transport, communication and trade ,banking and     

          insurance, real estate , and business services , public administration and   

          Defence services. Recently some new services have come up like IT ,call centre   

          software companies

Interdependence of various sectors

1.Economic activities are grouped into three different sector but they are highly interdependent .the development of one sector depends on the other. For example :primary sector gets many articles of its use such as fertilizers , pesticide , machineries equipments etc from the secondary sector and the secondary sector also receive raw material such as iron ore , cotton ,jute , sugarcane , wool etc.

2. Similarly both primary and secondary sectors receives services  such as transport and communication services ,banking services and insurance facilities from tertiary sector and the tertiary sector also requires many things from the primary sector such as food,  coal etc and from the secondary sector such as building ,machines and equipments calculators ,computers etc

Estimation of value of goods and services :

Since thousand of goods and services are produced in an economy it will be useless to count and add all these different  kinds of goods and services in physical terms . In order to solve this problem we take the market value of all these goods and services.

In the estimation of the value of goods and services we should include the value of  final goods and services only (final goods are those goods which are used either for final consumption by the consumers of for investment by the producer)

Now the question is why did we count the value of final goods and services only

If we take the value of all the goods and services produced in the economy then there will be overestimation of national income ,this type of estimation suffers from the  problem of double counting (when the value of one good is added more than one )

For example :

Wheat     flour       Maida        bread         sandwiches         consumer

1000       2000          2500          3000               3500                     3500

  

GDP: (gross domestic product)The sum total of value of production that is final goods and services of all the three sectors  during the financial year gives us the GDP. In India Central Statistical Organization performs the task of measuring GDP.

Each of the sectors primary secondary and tertiary ,produces a number of goods now we have to understand the relative importance of these sectors in the economy, for this purpose we look at the following two variables.

1.Composition of national product (share in total production )

2. Occupational structure (share in total employment)

Share in GDP:

SECTORS	1973	2003
PRIMARY	45%	23.5%
SECONDARY	21%	22.5%
TERTIARY	34%	54%

Reasons for growing importance of service sector in India :

1.After the independence it was realized that the foremost requirement for India's  

   development is the provision and expansion of basic services. It include   

    hospitals,education,administrative services, police station ,court banking, insurance 

   etc . The government made effort for the provision of these services.

2.The development of agriculture and secondary sector requires greater support   

   services such as transport , trade ,storage banking communication etc. As a result

     service  sector also expanded.

3.With the rise in income levels ,people normally demand more  and better services     

     especially in regard to education ,health ,training and entertainment ,as a result of it

    we have seen fast expansion of private school ,private hospital, shopping centre

   ,professional institution , tourism etc. this has led to the expansion of services sector

   in India in recent times.

4.In recent years ,new kinds of services are also rapidly emerging in India . These are

    information technology (IT) and IT-enabled services, mobile phones, tourism (such

    as medical tourism rural tourism) and repairing services etc.

However it should be noted that all the segments of service sector are not growing

   well, for example on the one hand there are a limited number of services that employ

   highly skilled and educated worker ,on the other hand a very large number of people

   are engaged as small shopkeeper ,repair persons, transport persons etc . They are

   barely managing their living

Share in employment:

SECTORS	1973	2000
PRIMARY	72%	56.5%
SECONDARY	11%	17.5%
TERTIARY	17%	26%

1.Though the importance of primary has decline ,it still retain the major position of

    major source of employment

2.There seems to be a modest change in the secondary sectors from the point of view

    of employment .

3.There has been significant increase in the share of tertiary sector in the total

     employment of the country

There is mismatch between the share in GDP and share in employment for example primary sector employs more than half of workers in the country but it produces only quarter of the GDP . On the other hand secondary and tertiary sector produces three-fourth of the GDP and employ less than half of the worker .

It indicate that the worker in agriculture are not producing to their full capacity . This is the case of under-employment or disguised employment (It refers to a situation wherein more people are engaged than required )these are found in many sectors agriculture sector, thousands of causal worker  who are engaged in   painters ,plumber, electrician, carpenter and repairpersons, footpath vendor pushcart etc

How  to generate more employment :

1.Government should make sincere efforts to increase irrigation facilities such as well

    tube wells tanks, canals etc we can provide employment to more people on the

    same agricultural land .

2.Government should make greater provision for investment in creating transport and

   storage facilities in the country .It will have multiple effect on employment one hand it

   will increase employment opportunity in farm sector and on the other hand create

   opportunity in transport sector.

3.Banks or government should provide adequate credit to the farmers at reasonable

   rates so that they can easily purchase seed fertilizers pesticides and agricultural

    implements.

4.Employment opportunity can also be created by establishing food processing and

    agro-based industries particularly in our rural sector. For example setting up of dal

    mill can help the farmer who grow pulse crops, if cold storage is constructed then it

    can provide opportunities to farmers to store their products, processing industries

    can also be established, milk collection centre ,honey collection centre .

5. There is wide scope for creating more jobs in our education and health sectors also .

    If we plan to provide education to all the school-going children of our country ,we will

    require more school building ,more teachers and other staff, It is estimated that

    nearly 20 lakh  jobs can be created in the education sector alone ,similarly if we

    want to improve the health situation of our people we need more doctors ,nurses

    ,hospitals medicines etc. This has enough potentiality to create more jobs in the

      health sector.

6.Tourism has a big potentiality to create more jobs in the country .It is estimated that if

     properly developed tourism sector in India can provide additional employment to

    more than 35 lakh people

7.Information technology can also provide big job opportunity to the countrymen.

MNEREGA (Mahatma Gandhi National Rural Employment Guarantee Act 2005 )

The NREGA provides a 100 days guaranteed employment  to at least on member of   

     each rural household in a year. In other words right to work has been given a legal

      shape

If the government fails to provide employment ,it will give unemployment allowance to   

    the people

At least one-third beneficiaries  shall be women

Initially it was implemented in 200 district but it will cover all district of the country within

   five years

Sector on the basis of terms of employment :

1.Organised sector:

    The sector which has some formal processes and procedures , rules and regulations    

    of work is termed as organized sector.

    They get regular and assured employment

  All such enterprises are registered by the government and they have to follow

    government rules and regulation.

 Organized sector workers have fixed hours of work and if they have to work more than

    they are paid overtime.

They enjoy paid casual leave ,medical leave ,travelling and dearness allowance

They are covered under social security measures .After retirement they get pension.

It also provide safe drinking water ,subsidized canteen facilities and recreation facilities

They have better environment and better condition of work  

2.Unorganised sector: 

The sector that does not follow any rules ,regulation and procedures is termed as

    unorganised sector.

All scattered and small units , small street shops, pushcart, and footpath vendors,

     rickshaw pullers, casual labour ,repair worker etc.

They do not get regular and secured employment

They get low wages and no social security measures are available to them.

They do not have any paid holiday and they have to work in unhealthy work condition    

    for longer hours of work

Sectors on the basis of ownership:

1.   Private sector : private sectors include all those occupation and economics activities wherein resources are privately owned and are operated with a profit motive.

2.   At present dominant part of our economic activities are in the private sector . It is estimated that 80% of the country activities are in private hand.

     3.In India agriculture, retail trade ,cottage industries ,professional  such as doctors  

       ,advocates ,charted accountant etc. Most of  the big companies are also in the

         hands of private sector in India . Tata,  Bajaj ,Reliance, Birla ,Jindal,TCS ,Infosys

          etc .

Public  sector:

 1. Public sector enterprises are those occupations and economic activities whose

        resources are owned ,controlled and managed by the government.

2.In this sectors ,economic activity are largely operated in the public interest .

      For example SAIL, IOC , HMT , LIC ,RBI ,railway ,post and telegraph etc

 Indian government given importance to public sector because :

1.Development of infrastructure is an essential requirement for rapid economic   

     development of the country

2.A major part of public sector investment in India  was devoted to the development of    

    infrastructure in the country

3.Public sector is needed to build a strong industrial base in India especially in the

    fields of iron and steel ,heavy industry ,engineering ,coal etc

4.There are some activity which require government support and encouragement in

    public interest for example : selling electricity at reasonable rate

5.It is useful and controlling monopoly and concentration of economic power and

    achieving the goal of social justice

6.Some activities are prime responsibility of government like education and health

7.Government  should also spend money on the welfare of children and on the aspects

    of human development  for example : safe drinking water , housing facilities etc

8.The expansion of public sector is also necessary to ensure a balanced regional

     growth in the country