The economy of a country is divided into various sectors, which produce the goods and the services for the people. The chapter examines the three main sectors of the Indian economy, namely the primary sector, the secondary sector and the tertiary sector, the ways in which the sectors are classified, the comparison of the sectors on the basis of the production and the employment, and the concepts of the gross domestic product (GDP), the unemployment and the organised and the unorganised sectors.
The primary sector, which produces the goods by exploiting the natural resources, such as the agriculture, the fishing, the forestry and the mining, is the oldest sector of the economy. The secondary sector covers the activities in which the natural products are changed into the other forms through the manufacturing, such as the industries and the construction. The tertiary sector provides the services, such as the transport, the banking, the communication, the education and the health.
For the board examination, students must understand the classification of the sectors, the reasons for the growing importance of the tertiary sector, the concepts of the GDP and the ways in which it is calculated, the employment situation in the different sectors, the problem of the disguised unemployment, and the differences between the organised and the unorganised sectors.
The economic activities of the country can be divided into the three main sectors: the primary, the secondary and the tertiary sectors. The primary sector produces the goods by exploiting the natural resources of the country, and it includes the activities such as the agriculture, the fishing, the forestry and the mining. The primary sector is called the primary sector because it forms the base for all the other products, and the goods produced in this sector are the natural products.
The secondary sector covers the activities in which the natural products are changed into the other forms through the ways of the manufacturing. The goods produced in the secondary sector are not produced by the nature, but they are produced by the processing of the natural products, such as the conversion of the cotton into the cloth and the iron ore into the steel. The secondary sector is also known as the industrial sector.
The tertiary sector provides the services to the people, and it includes the activities such as the transport, the banking, the communication, the education, the health, the trade and the tourism. The tertiary sector is also known as the service sector, and it helps in the development of the primary and the secondary sectors. The tertiary sector has grown in importance in the recent decades, and it now contributes the largest share to the GDP of India.
The three sectors of the economy can be compared on the basis of the production and the employment. The production is measured in terms of the value of the goods and the services produced in the different sectors, and the employment is measured in terms of the number of the people employed in the different sectors. The comparison of the three sectors shows that the tertiary sector has the largest share in the GDP of India, but the primary sector employs the largest number of the people.
The primary sector employs about half of the Indian population, but its share in the GDP is smaller, while the tertiary sector contributes the largest share to the GDP but employs a smaller proportion of the people. This shows that there is a mismatch between the production and the employment in the different sectors. The workers in the primary sector, especially the agricultural workers, have the low productivity and the low incomes, as the sector does not create enough opportunities for the productive employment.
The comparison of the sectors is important for the understanding of the structure of the economy, and it helps in the formulation of the policies for the development of the different sectors. The chapter stresses that the development of the economy requires the creation of the productive employment opportunities in all the sectors, and the movement of the workers from the low-productivity to the high-productivity sectors.
The Gross Domestic Product (GDP) is the value of all the final goods and the services produced within the country during a particular year. The GDP is a measure of the total production of the country, and it is calculated by the Central Statistics Office (CSO) in India. The GDP measures the size of the economy, and the growth of the GDP indicates the growth of the economy. The GDP is calculated by adding the value of all the final goods and the services produced in the three sectors of the economy.
The growth of the three sectors has been uneven, and the tertiary sector has grown the fastest in the recent decades. The growth of the tertiary sector has been driven by the growth of the services such as the information technology, the banking, the insurance, the communication and the tourism. The secondary sector has also grown, but the primary sector has grown the slowest, and the share of the agriculture in the GDP has declined over the years.
The growth of the GDP, however, does not tell us about the distribution of the income, and the GDP growth may not benefit all the people. The GDP is a measure of the total production, and it does not take into account the inequality, the poverty and the environmental costs of the growth. The chapter stresses that the growth of the economy must be accompanied by the creation of the employment and the improvement in the living standards of the people.
The employment situation in India is characterised by the underemployment and the disguised unemployment. The disguised unemployment is the situation in which the people are employed, but they are not contributing to the production, and the removal of these people from the work would not reduce the production. The disguised unemployment is common in the agricultural sector, where the land is cultivated by the family, and the members of the family work on the land even when there is no work for them.
The disguised unemployment exists because the primary sector, especially the agriculture, does not create enough opportunities for the productive employment, and the excess labour is absorbed in the sector. The government has to create the employment opportunities in the other sectors, such as the industries and the services, to absorb the surplus labour from the agriculture. The government has also launched the programmes such as the MGNREGA, which guarantees the employment to the rural households.
The chapter stresses that the creation of the productive employment is essential for the reduction of the poverty and the improvement of the living standards of the people. The employment can be created in the secondary and the tertiary sectors, and the government has to invest in the education, the skill development and the infrastructure to create the employment opportunities.
The sectors of the economy can also be classified into the organised and the unorganised sectors on the basis of the conditions of the employment. The organised sector covers the enterprises that are registered with the government, and it follows the rules and the regulations of the government, such as the factories act and the minimum wages act. The workers in the organised sector enjoy the security of the employment, the fixed working hours, the paid leaves, the provident fund and the medical benefits.
The unorganised sector covers the small and the scattered units that are largely outside the control of the government, and it includes the small shops, the farms, the construction workers and the domestic workers. The workers in the unorganised sector do not have the security of the employment, the fixed working hours, the paid leaves or the other benefits, and they are often the poor and the vulnerable sections of the society.
The unorganised sector employs the largest number of the workers in India, and the workers in this sector are the most vulnerable. The chapter stresses the need for the protection of the workers in the unorganised sector, and the provision of the minimum wages, the social security and the other benefits to them. The government has enacted the laws and the schemes for the protection of the unorganised sector workers, such as the minimum wages and the social security schemes.
The chapter concludes by stressing the need for the growth of all the sectors of the economy and the creation of the employment opportunities. The economy of India has grown rapidly in the recent decades, but the growth has not created enough employment opportunities, and the problem of the unemployment and the underemployment remains. The growth of the sectors has to be accompanied by the creation of the productive employment, and the workers have to be provided the skill development and the better working conditions.
The government has to play an important role in the development of the sectors, through the investment in the infrastructure, the education, the health and the skill development, and through the provision of the credit and the other facilities to the enterprises. The development of the sectors has to be inclusive, and it has to benefit the poor and the vulnerable sections of the society.
The chapter concludes with the hope that the balanced growth of the three sectors, with the creation of the productive employment, will lead to the reduction of the poverty and the improvement in the living standards of the people.
| Sector | Nature | Examples |
|---|---|---|
| Primary sector | Produces goods by exploiting natural resources | Agriculture, fishing, forestry, mining |
| Secondary sector | Changes natural products into other forms | Manufacturing, industries, construction |
| Tertiary sector | Provides services | Transport, banking, communication, education, health |
| Concept | Meaning |
|---|---|
| GDP | Value of all final goods and services produced in a country in a year |
| Disguised unemployment | People employed but not contributing to production |
| Organised sector | Registered enterprises following government rules |
| Unorganised sector | Small scattered units outside government control |
The Indian economy is composed of the primary, secondary and tertiary sectors, which together produce the goods and the services for the people. While the tertiary sector now contributes the largest share to the GDP, the primary sector, especially agriculture, still employs the largest number of people, reflecting a mismatch between production and employment. The GDP measures the total production of the country, but it does not capture the distribution of income or the well-being of the people. The economy faces the problems of disguised unemployment, the vulnerability of the workers in the unorganised sector, and the lack of productive employment opportunities. The balanced growth of all the sectors, with the creation of productive employment, the protection of the unorganised sector workers and the development of skills, is essential for the reduction of poverty and the improvement of the living standards of the people.