|Table of contents
|Sectors of the Indian Economy
|SECTORS OF ECONOMIC ACTIVITIES
|COMPARING THE THREE SECTORS
|Historical Change in Sectors
1. Types of Sectoral Classification:
Primary / Secondary / Tertiary:
Organised / Unorganised:
Public / Private:
2. Changing Roles of Sectors:
3. Fundamental Concepts:
Gross Domestic Product (GDP):
4. Problems Caused by Changes in Sectoral Roles:
Nature of Activities: The primary sector involves activities that directly use natural resources. Examples include agriculture, dairy farming, fishing, forestry, and mining.
Dependency on Natural Factors: These activities are dependent on natural factors like rainfall, sunshine, climate, and biological processes of animals.
Natural Products: The products of the primary sector, such as cotton, milk, minerals, and ores, are considered natural products.
Nature of Activities: The secondary sector encompasses activities in which natural products are transformed into other forms through manufacturing processes.
Manufacturing Process: Products in this sector are not produced by nature but require a manufacturing process. This can take place in factories, workshops, or even at home.
Examples: Examples include the production of cloth from cotton, sugar or gur from sugarcane, and the conversion of soil into bricks for construction.
Nature of Activities: The tertiary sector involves activities that support and aid the development of the primary and secondary sectors.
Service-oriented: Unlike the production of goods, tertiary activities primarily generate services. It is also known as the service sector.
Examples: Activities in this sector include transportation, storage, communication, banking, trade, and various services like education, healthcare, personal services (e.g., barbers, cobblers), legal services, and administrative work.
Service Sector and Information Technology:
Evolution of Services: The service sector not only includes traditional services but has expanded to incorporate new services based on information technology.
Examples of Modern Services: Internet cafes, ATM booths, call centers, software companies, and other IT-related services have become integral parts of the modern service sector.
Importance of Tertiary Sector:
Supporting Role: The tertiary sector plays a crucial supporting role in facilitating the production and distribution of goods from the primary and secondary sectors.
Essential Services: Apart from traditional services, essential services like education, healthcare, and personal services contribute significantly to the well-being of society.
Counting Goods and Services:
Diversity of Goods and Services: The primary, secondary, and tertiary sectors collectively produce a vast array of goods and services.
Measurement Challenge: Counting the actual number of goods and services is challenging due to the sheer volume and diversity of products.
Use of Values: Economists suggest using the values (prices) of goods and services as a measure instead of counting actual quantities.
Calculation of Value:
Example: If 10,000 kg of wheat is sold at Rs 8 per kg, the value is Rs 80,000. Similarly, the value of goods and services in each sector is calculated.
Summation: The values of goods and services in each sector are added up to get a comprehensive measure of the total production in that sector.
Final Goods and Services:
Selection Criteria: Not every good or service produced and sold is counted; only final goods and services are considered.
Definition of Final Goods: Final goods are those that reach the consumers and are not used as intermediate goods in further production.
Avoiding Double Counting: Intermediate goods, which are used in producing final goods, are not separately counted to avoid double-counting the value of the same item.
Understanding Intermediate Goods:
Example: If a farmer sells wheat to a flour mill, and the flour is sold to a biscuit company, the biscuits produced by the company are the final goods.
Intermediate Goods Explanation: Wheat and wheat flour, in this example, are intermediate goods as they are used in producing the final good (biscuits).
Avoiding Duplication: Counting the value of intermediate goods separately would result in duplication, as the value of the final good already includes the value of all intermediate goods used.
Calculation of GDP (Gross Domestic Product):
Definition of GDP: GDP is the total value of all final goods and services produced within a country during a specific year.
Sum of Sectoral Production: The sum of the values of final goods and services in the three sectors gives the Gross Domestic Product of the country.
Economic Indicator: GDP is a crucial economic indicator that reflects the overall size and health of an economy.
Measurement of GDP in India:
Central Government Ministry's Role: In India, the measurement of GDP is a significant task undertaken by a central government ministry.
Data Collection: The ministry collaborates with various government departments across Indian states and union territories to collect information on the total volume of goods and services, their prices, and other relevant data.
Estimation Process: Based on the collected data, the ministry estimates the Gross Domestic Product, providing insights into the economic performance of the country.
1. Evolution of Sectors in Developed Countries:
2. Shift to Tertiary Sector:
1. Tertiary Sector's Ascendancy:
2. Reasons for Tertiary Sector's Importance in India:
3. Disparities in the Service Sector:
4. Shifts in GDP vs. Employment:
5. Underemployment in Agriculture:
6. Addressing Underemployment:
7. Challenges in Service Sector Employment:
|1. What are the three sectors of the Indian economy?
|2. What are the main activities involved in the primary sector?
|3. What is the significance of the secondary sector in the Indian economy?
|4. Explain the importance of the tertiary sector in the Indian economy.
|5. How has the composition of sectors in the Indian economy changed over time?