Sectors Of the Indian Economy
Different kind of Economic activities
– Primary sector involves activities that exploit natural resources and form the base for other products.
– Cultivation of cotton depends on natural factors like rainfall, sunshine, and climate.
– Cotton and milk are natural products obtained through agricultural and dairy activities.
– Secondary sector involves manufacturing natural products into different forms through industrial activity.
– Tertiary sector comprises activities that support and aid the development of primary and secondary sectors.
– Transport, storage, communication, banking, and trade are examples of tertiary activities in the service sector.
– The service sector also includes essential services like education, healthcare, personal services, and administrative work.
– Information technology-based services have gained significance, such as internet cafes, ATMs, call centers, and software companies.
COMPARING THE THREE SECTORS
Primary Sector
– Primary, secondary, and tertiary sectors contribute to the production of goods and services.
– Economists use the values of goods and services rather than actual numbers to determine total production.
– Only final goods and services are counted, not intermediate goods.
– The sum of production in the three sectors gives the Gross Domestic Product (GDP) of a country.
– The Ministry of the central government in India measures and estimates the GDP.
– Initially, the primary sector was the most important in economic activity.
– Over time, there has been a shift from the primary sector to the secondary sector due to industrialization.
– In developed countries, there has been a further shift from the secondary sector to the tertiary sector, which is now the most important.
– The service sector has become the largest contributor to total production and employment in developed countries.
– The next section will explore the total production and employment in the three sectors in India and whether similar changes have occurred.
– Graph 1 compares the production of goods and services in the three sectors for the years 1973-74 and 2013-14.
– The graph demonstrates the growth of total production over the forty-year period.
PRIMARY, SECONDARY AND TERTIARY SECTORS IN INDIA
– Graph 1 compares the production of goods and services in India’s three sectors in 1973-74 and 2013-14.
– Over the forty-year period, the tertiary sector experienced the highest growth, surpassing the primary sector as the largest producing sector in 2013-14.
– Reasons for the growing importance of the tertiary sector in India include the demand for basic services, the development of agriculture and industry, rising income levels, and the emergence of information and communication technology-based services.
– Not all parts of the service sector are growing equally, with disparities between highly skilled workers and those engaged in low-income services.
– Graph 2 shows the changing share of the three sectors in GDP, while Graph 3 highlights that the primary sector remains the largest employer.
– Limited job creation in the secondary and tertiary sectors explains the dominance of the primary sector in employment.
– Underemployment is prevalent in agriculture, where workers are engaged but not fully employed, leading to disguised unemployment.
– Shifting some workers from agriculture to other sectors would not adversely affect agricultural production, and their incomes would increase. Similar underemployment exists in the urban service sector, where casual workers struggle to find daily employment.
How to Create More Employment?
– Underemployment in agriculture and unemployment are prevalent issues in India.
– Increasing employment can be achieved through various means, such as improving irrigation infrastructure, transportation, and storage facilities, providing affordable agricultural credit, promoting industries and services in semi-rural areas, and expanding the education and healthcare sectors.
– The youth population presents an opportunity for job creation in the education and healthcare sectors.
– Each state or region has unique potential for income and employment generation, including tourism, regional crafts, and IT services.
– The implementation of long-term measures requires planning and government support, while short-term measures include the Mahatma Gandhi National Rural Employment Guarantee Act 2005 (MGNREGA 2005), which guarantees 100 days of employment per year to eligible individuals in rural areas.
– MGNREGA 2005 prioritizes works that contribute to increased land productivity.
DIVISION OF SECTORS AS ORGANISED AND UNORGANISED
– Activities in the economy can be classified based on the conditions of work and adherence to rules and regulations.
– The organized sector comprises enterprises where employment terms are regular, following government rules and regulations (e.g., Factories Act, Minimum Wages Act). Workers have assured work, benefits, and security.
– Organized sector workers enjoy employment security, fixed working hours, overtime pay, paid leave, holidays, provident fund, gratuity, medical benefits, safe working environment, and pensions upon retirement.
– In contrast, the unorganized sector consists of small and scattered units outside government control, characterized by low-paid and irregular jobs.
– Unorganized sector workers lack provisions for overtime, paid leave, holidays, sickness leave, and employment security. They can be dismissed without reason and are subject to the employer’s discretion.
– The unorganized sector includes self-employed individuals, street vendors, repair workers, and farmers who hire laborers as needed.
How to Protect Workers in the Unorganised Sector?
– The organized sector offers desirable jobs, but employment opportunities in this sector are expanding slowly.
– Many organized sector enterprises operate in the unorganized sector to evade taxes and avoid labor protection laws, leading to exploitation and low wages.
– Workers in the unorganized sector face low and irregular earnings, lack job security, and are deprived of benefits.
– Since the 1990s, there has been a significant increase in job losses in the organized sector, forcing workers into low-paying unorganized sector jobs.
– Vulnerable groups in the unorganized sector include landless agricultural laborers, small farmers, sharecroppers, artisans, workers in small-scale industries, construction, trade, transport, street vendors, and marginalized communities.
– Support and protection for the unorganized sector are necessary, including timely delivery of agricultural inputs, credit, storage facilities, marketing outlets, government support for small-scale industries, and social protection for scheduled castes, tribes, and backward communities.
– Ensuring the well-being of unorganized sector workers is crucial for economic and social development.
SECTORS IN TERMS OF OWNERSHIP: PUBLIC AND PRIVATE SECTORS
– Economic activities can be classified based on ownership and service delivery into the public and private sectors.
– In the public sector, the government owns assets and provides services, such as railways and post offices, while in the private sector, ownership and service delivery are in the hands of private individuals or companies like Tata Iron and Steel Company Limited (TISCO) or Reliance Industries Limited (RIL).
– The private sector is driven by profit motives and requires payment for services, while the public sector aims to serve the society as a whole and is funded through taxes and other means.
– Governments undertake heavy spending on activities that the private sector cannot provide at a reasonable cost or scale, such as construction of roads, bridges, railways, electricity generation, and irrigation projects.
– The government supports activities that the private sector may not continue without encouragement, such as supplying electricity at affordable rates to industries or purchasing crops from farmers at fair prices to support both farmers and consumers.
– Primary responsibilities of the government include providing health and education facilities for all, addressing issues like illiteracy, malnutrition, infant mortality rates, access to safe drinking water, housing for the poor, and food and nutrition.
– Government spending is necessary to address the needs of the poorest and most neglected regions of the country and promote human development.