The Sectors of Indian Economy Notes
1. Sectors of economic activities
2. Comparing the three sectors
3. Primary, secondary and tertiary sectors in India
4. Division of sectors as organised and unorganised
5. Sectors in terms of ownership, Public and Private sector
1. Sectors of economic activities
Economic activities : The activities in which goods or services are produced are referred to as economic activities.
It has been classified into some groups using some important criterion. These groups are also called sectors.
a) Primary sector
The sectors in which goods are produced by exploiting the natural resources are called primary sector.
It is also known as agriculture and related sector.
E. g:-- cultivation of cotton, mining, dairy, forestry etc.
📝 -- It is called primary as it forms the base for all other products that we make.
b) Secondary Sector
➡️ The sector in which natural products are changed into other forms through manufacturing.
➡️The product is manufactured in a factory, a workshop or at home. The product here obtained is called manufactured product.
e.g:- Cotton Industry,sugar Industry etc.
➡️ It is also known as manufacturing or industrial sector.
c) Tertiary Sector
The sector in which services are produced for supporting the development of primary and secondary sector.
e. g:- Transportation, storage,
communication banking, teaching etc.
Note -- Each sector is interdependent on each other.
2. Comparing the three sectors
In this topic we will see
a) How much goods or services are produced?
b) How many people work in each sector?
How to calculate the total production in each sector?
Problem : It may seem an impossible task to count them as there are many thousands of goods and services produced.
Solution : we should add the values of goods and services rather than adding the actual numbers.
e. g:-- If 1000 kg is sold at ₹ 8/kg .The value of wheat will be 80,000.
Precautions : Not every goods or service that is produced needs to bs counted. It makes sense to only include the final goods and services not the intermediate goods.
Intermediate goods : The goods that are used up in producing final goods and services.
e. g:- wheat and flour in making biscuits.
Final goods : The goods that reach the consumers are called final goods.
Q. Why are only final goods and services counted?
The final goods and services are only counted because they already include the value of all the intermediate goods.
GDP(Gross Domestic Product)
It refers to the sum of value of final goods and services produced in each sector during a particular year.
The task of measuring GDP in India is undertaken by a central government ministry with the help of various states and UTs.
#Historical change in sectors
➡️Initially primary sector was the most important sector of economic activity in now developed countries .
➡️Due to development in farming method, agriculture sector began to prosper. It began producing sufficient foods .
Many people could now take up other activities like trading, transportation ,Army Handicrafts etc.
However at this stage most of the goods produced were natural products from the primary sector.
➡️ Due to introduction of new machine and new methods, factory began growing. secondary sector gradually became the most important in total production and employment.
➡️ In the past 100 years there has been further shift from secondary to tertiary sector in developed countries . The service sector has become the most important in terms of total production. Most of the people are employed in in the service sector. This is the general pattern observed in developed countries .
3. Primary secondary and tertiary sector in India
Over the last 40 years production in all three sectors has increased but tertiary sectors saw the most enhancement. As a result tertiary sector has emerged as the largest producing sector in India replacing the primary sector.
Reason for the growth of tertiary sectors in India
a. Requirement of basic services
several services such as hospitals, post office, Police Station,courts, defence, transport ,bank and insurance etc are considered as basic services in a developing country. The government has to take responsibility of the services.
b. Development of the first two sectors
The improvement in primary and secondary sector leads to the development of services such as transport trade as each one is interdependent on each other .
c. Rise in income level
As income goes up, certain group of people start demanding many more services like:
eating out, shopping ,tourism, private hospitals, private schools ,professional training.
Note 📝 These changes are easily visible in cities, especially in big cities.
d) Improvement of ICT
Over the past 10 years many new services based on information and Communication Technology have become important and essential .
Note -- you must remember that only a part of this section is growing in importance .
Large number of people are still engaged in services such as small shopkeepers repair persons etc.
Where are most of the people employed?
The primary sector continue to be the largest employer even now.
Why didn't a similar shift take place in case of employment?
√ It is because not enough jobs were created in the Secondary and Tertiary sectors.
√ Even though production of goods and services went up but the employement didn't rise in the same manner.
√ As a result more than half of the workers in country are working in the Primary sector, mainly in agriculture.
√ It means there are more people in agriculture than required. This leads to the problem of disguised unemployment.
Disguised Unemployment
The situation in which more people are working in any sector than required and if you move a few people out, production will not be affected..This is referred to as disguised or hidden unemployment.
Features
i) People are made to work less than their potential..
ii) The labor effort of workers get divided.
iii) They may earn very little than they desire...
How to create more Employments
Long term solutions
a) Investing for irrigation
The government can spend some money or banks can provide a loan to construct a well for those farmers who depend on rain for irrigation.
b) Investing for storage and transportation
Investment in storage and transportation and making of better rural roads can help reach the products of farmers to cities.. This activity can not only provide employment to farmers but also to those involved in services like transport or trade...
c) Providing loans at reasonable interest rate
Farmers also need seeds, fertilisers, agricultural equipments and pumpset to draw water. If bank provides loan at reasonable interest rate, they can buy all these in time and cultivate their land..
d) Identification and Setting up of Industries (For semi-rural areas)
We can identify the location suitable to set up industries according to availability of desired products...
e. g:- Dal mills can be set up where Dal is grown more.
e) Education sector
Many of children don't attend schools for some reasons. If these children are to attend schools, we will require more buildings,more teachers and other staffs..
Similarly many jobs can be created in our health sectors.
g) Other methods
Every state has potential for increasing the income and employment for people in that area.
e. g:- Tourism , Regional craft Industry or new services like IT.
Short Term solution
#NREGA
It stands for National Rural Employment Guarantee Act ,2005.
Provisions
a) Needy people are guaranteed 100 days of employment in a year by the government.
b) If the government fails in its duty to provide employment, it will give unemployment allowances to the people.
4. Division of sectors as organised and unorganised
a. Organised Sector
√ It is called organised sector as it has some formal procedures.
√ They are registered by the government and have to follow its rules and regulations.
√ They are covered under many acts like The Factories Act, Minimum Wages Act etc.
√ The workers in the oraginsed sector enjoy security of employment.
√ They are expected to work only a fixed number of hours, in case of extra work they have to be paid overtime.
√ They also get several other benefits from employers such as : Paid leave, Payment during Holidays, Provident Fund, Gratuity etc...
b. Unorganised Sector
√ The small and scattered units which are largely outside the control of the government.
√ There are rules and regulations but these are not followed.
√ There is no security of employment in this sector. People can be asked to leave any time without any reason.
√ There is no provision for overtime, paid leave, payment during holidays etc available in unorganised sector.
Note 📝 - It also includes those working on their own doing small jobs.
e. g:-- Selling on the street, doing repair work etc..
#How to protect workers in the unorganised sector
Problem faced by workers :
a) They are paid low salary .
b) They are often exploited and their jobs are not secure .
c) Their earnings are not regular.
Why Protection?
√ Since 1990 large no of workers lost their jobs in the organised sector. These workers are forced to take up jobs in the unorganised sector with low earnings.
√ Hence, besides the need for more work, support and protection is also needed to the workers of unorganised sector.
Who needs Protection?
a. In Rural areas
i) Landless agricultural labours
ii) Small Farmers
iii) Weavers, Blacksmith and carpenters.
Support -- These farmers need to be supported through facility for timely delivery of seeds, agricultural inputs, credits, storage facilities and marketing outlets..
b. In urban areas
• Workers in small scale Industry
• Casual Workers in construction
• Trade and Transport
• Street Vendors
• Head load workers
• Rag Pickers
Support :- They also need financial support from the government and social support from the society..
Note 📝 --Majority of workers in the unorganised sector come from SC, ST and OBC. Besides irregular and low paid job these workers also face social discrimination..
5. Public and Private Sector
a. Public Sector
The sector in which most of the assets and services are owned by the government.
The purpose of this sector is not just to gain profits but to provide welfare to the people.
Why some sectors are owned by the government?
• There are large number of activities which are primary responsibilities of the government. The government must spend on these.
e.g:- Providing health and education for all, facility of safe drinking water, housing facilities for the poor, food and nutrition...
• There are several things needed by society as a whole but ----Private sector would not provide them at reasonable cost...
Why Private sector can't do it?
• It is beyond the capacity of private sector, because some of these need spending large sums of money.
• Collecting money from thousands of people using these facilities is not an easy task for them.
• Even if they provide such things they'd charge a high rate for their use..
e. g:-- Construction 🚧 of roads, railway 🚂, bridges 🌉, generating electricity and providing irrigation through dams etc.
Conclusion :- Thus ,Governments have to undertake such heavy spending and ensure that these facilities are available for everyone.
b. Private Sector
• In this sector private individuals or companies own of the assets and provide services.
• The purpose of this sector is to earn more profit.
e. g:- Tisco , RIL ( Reliance Industries Limited)
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