Sectors of the Indian Economy

Sector Classification by Economic Activity

  • Three broad groups based on nature of work:
    • Primary: exploits natural resources (agriculture, fishing, mining)
    • Secondary: converts natural products into manufactured goods (industry, construction)
    • Tertiary: provides services that support other sectors and final consumers (transport, banking, IT, health, education)
  • Activities of all three sectors are \text{interdependent}

Measuring Production – GDP & GVA

  • Only final goods & services are summed; intermediate goods excluded to avoid double-counting
  • Gross Domestic Product (GDP): \text{GDP} = \sum \text{Value of final goods \& services produced within a country in a year}
  • Gross Value Added (GVA): sectoral contribution to output after adjusting for taxes & subsidies; now used in official data

Historical Shift in Sectoral Shares (India)

  • 1977-78: Primary largest in output; by 2017-18 tertiary largest
  • Tertiary growth drivers: basic public services, support to agriculture/industry, rising incomes (tourism, private health/education), ICT
  • Graph data (2017-18): tertiary ≈ 50-60\% of GVA; primary share declined sharply

Employment Patterns & Underemployment

  • Primary still employs >50\% workers but generates ≈\frac{1}{6} of GVA ⇒ low productivity
  • Disguised/hidden unemployment: more workers than required (e.g., small farms, casual urban services)
  • Open unemployment: persons without any work but seeking jobs

Organised vs Unorganised Sector

  • Organised: registered, follow labour laws; regular hours, wages, overtime pay, social security (PF, gratuity, paid leave, pension, medical)
  • Unorganised: small, scattered, often outside regulation; irregular low wages, no job security/benefits; includes most landless labourers, small farmers, street vendors, casual construction workers

Public vs Private Sector (Ownership)

  • Public: government owns assets & delivers services (Railways, Post Office); aim—public welfare, not profit
  • Private: individuals/companies own & operate for profit (TISCO, Reliance)
  • Government intervenes where (i) large capital needed (dams, highways), (ii) social pricing necessary (PDS, power subsidy), (iii) human development required (health, education)

Strategies to Increase Employment

  • Rural: irrigation, rural roads, storage, agro-processing, cheap credit, tourism, crafts
  • Urban/semi-rural: small-scale industries, IT services, education & health expansion
  • MGNREGA 2005: legal Right to Work; guarantees 100 days of wage employment per rural household per year; unemployment allowance if work not provided

Protection Needed for Unorganised Workers

  • Rural focus: landless labourers, small/marginal farmers, artisans — need timely inputs, credit, marketing, insurance
  • Urban focus: small-scale units, casual labour, street vendors — need legal protection, fair wages, safety, social security
  • Vulnerable social groups (SC, ST, OBC) over-represented; require both economic & social safeguards

Key Terms & Formulas (Quick Recall)

  • Final Goods vs Intermediate Goods
  • GDP & GVA definitions
  • Disguised Unemployment
  • Organised/Unorganised, Public/Private sector distinctions
  • MGNREGA \Right\ to\ Work guarantee