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9

9

DIFFERENT SECTORS ININDIAN ECONOMY

• Which are the activities directlyinvolved in the utilization of naturalresources?

• Which are the industrial activities thatproduce goods?

• Which are the activities that renderservices to others?

Normally, these economic activities arecategorized into many sectors. Let usexamine an example.

We are familiar with paddy cultivation.We depend on natural forces like climate,sunlight, rain, fertility of soil for the

People engaged in different economicactivities are depicted in the abovepictures. In the pictures, while some ofthem represent production of goods,others represent services. Categorize theactivities shown in the pictures andrecord in the following table.

Production of goods Rendering services

$ $

$ $

In these activities:

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9cultivation of paddy. The output of thisprocess is paddy, which comes under'primary sector'. Agriculture is the mostsignificant subcategory in the primarysector.

Why do we call this sector 'primary'?

• Activities are being undertaken byutilizing natural resources.

• These activities are inevitable for theexistence of human beings.

When we analyse theproduction of goods, it is donethrough industrial process,which is part of the 'secondarysector'. Construction worksalso come under this sector.

The third sector is concernedwith the production of servicesthat people require. Theservices that primary andsecondary sectors require areprovided by this sector. It is called 'tertiarysector'. In short, all economic activities canbe categorized into one of these sectorsviz., primary, secondary and tertiarysectors.

See the table (9.1) for understanding theactivities that come under each sector.

Primary Sector Secondary Sector Tertiary Sector

• Agriculture and • Industy • Tradeallied activities

• Forestry • Electricity, gas, water supply • Hotel• Fishing • Construction • Transport and

Communications• Mining • Storage

• Banking• Insurance• Business• Real Estate• Social Service

Source : CSO National Accounts Statistics - Table 9.1 - Different Sectors

Prepare a table showing the economicactivities done by people in your region.

$ Trade $

$ Cattle farming $

$ $

Categories these economic activities intoand note down in the table given below

Primary Sector Secondary Sector Tertiary Sector

$ $ $

$ $ $

$ $ $

Interdependence of sectorsWe have seen that economic activities inan economy take place in primary,secondary and tertiary sectors. Theinterdependence of these sectors is helpfulin attaining economic progress. The

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9• Which sector supplies raw materials

for handloom industry?

Find out more examples showing the

direct and indirect interdependence of

each sector on others.

Contribution of each sector to theeconomyWe have seen that primary, secondaryand tertiary sectors produce differentgoods and services. In order tounderstand the relative strength of asector, we have to see how much goodsand services is produced by each sector.

The sum of the value of goods and servicesproduced in each sector during aparticular period in a country representsthe national income [NI] of that country.In India, we calculate this as GrossDomestic Product [GDP].

In the same way, each State will add upthe value of final goods and servicesproduced in each sector to get its statedomestic product [SDP].

The contribution from primary, secondaryand tertiary sectors to GDP and SDPduring the year 2007-08 is shown in Table9.2. Based on the following, what are theinferences that can be drawn?

• How much is the contribution of eachsector to GDP/SDP?

• Which sector contributes the largestshare to GDP and SDP?

following are some of the situationsshowing the interdependence of sectors.

• What will happen to the sugarproducing factories in the secondarysector if sugar cane is not supplied tothem by the primary sector?

• If sugar producing factories importsugar cane from foreign countriesinstead of purchasing it fromdomestic primary sector, what willhappen to the primary sector?

• Suppose the services of transport,storage, etc, are not available totransport sugar produced in thesecondary sector, what will happen tothat sector?

What do these different situationsindicate? Find out the answers throughdiscussion. We have seen now how thesesectors are inter-related. Theinterdependence can be seen in theavailability of labour, raw material,trading of services, etc.

The sustainability of economy depends

on the strength of interdependence

among primary, secondary and tertiary

sectors.

• Which of the sectors are inevitable forextracting rice from paddy, which isproduced in the primary sector?

• Which are the inter-related sectorswhen we purchase tyre for vehicles?

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9• Which of the sub category in each sector contributes the largest share?

• Find out the GDP and SDP of India and Kerala respectively.

Table - 9.2 (Source : CSO)

-- Agriculture and allied activities 718278 17447 .............

- Forestry 29069 1588 .............

- Fishing 35250 2169 .............

- Mining 117431 685 .............

• Primary Sector Total .................. .................. .............

- Industry 705130 9803 .............

- Electricity, gas, water supply 76066 1324 .............- Construction 376266 23915 .............

• Secondary Sector .................. .................. .............

- Trade 719262 35587 .............

- Transport and communications 371446 11736 .............

- Banking, Insurance Real Estate 594096 20496 .............

- Social service 578598 20484 .............

• Tertiary Sector .................. .................. .............

Total GDP .................. SDP ............... .............

Structural changes of sectorsThe structural change of sectors shows thefact that the primary sector contributes thelargest share to the national income in theinitial stage of development of allcountries. But in due course, theimportance will be shifted from the

primary sector to the secondary and thenfrom the secondary to tertiary sectors. InIndia also, primary sector was dominant.At present the, tertiary sector is the largestcontributor in the place of the primarysector. See Table 9.3.

SectorIndia

2007-2008(` crores)

India %2007 - 2008

Kerala2007-2008(` crores)

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9

After calculating GDP for each year, makesuitable hints to analyse the table. Whatare your inferences when the table isanalyzed on the basis of the hints?

• The tertiary sector contributes moreshare to GDP than the other twosectors.

•

The proportion of GDP contributed by the

primary, secondary and the tertiary sectorscan be understood from table 9.4

On the basis of the information given inTable 9.3, we can say that the contributionmade by each sector to GDP is on the rise.But when we analyze Table 9.4, it isunderstood that the contribution of theprimary sector to GDP is more thanhalved.

SectorShare in GDP (in Crore Rs)

1950 - 51 1970 - 71 1990 - 91 2007 - 08 2008 - 09

Primary sector 5155 18657 164575 900028 987167

Secondary sector 1328 8470 124684 1157462 1296900

Tertiary sector 3285 15854 225773 2263402 2649115

GDP ......... ......... ......... ......... .........

Table - 9.3 (Source : CSO)

Sector Share in GDP (in percentage)

1950 - 51 1970 - 71 1990 - 91 2007 - 08

Primary sector 53 43 32 21

Secondary sector 14 20 24 27

Tertiary sector 33 37 44 52

GDP 100 100 100 100

Table - 9.4 (Source : CSO)

What are the other inferences that can bederived from Table 9.4 and 9.5. Prepare anote based on that.

Let us see why the tertiary sector has gotso much significance?

For the progress of any country, thegrowth of different sectors is vital. Whenthere is high economic growth, the

requirement of services goes up. As aresult, we have to provide services on alarge scale. This naturally raises thesignificance the tertiary sector or servicesector.

• Hospitals

• Educational institutions

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Source : National Sample SurveyTable - 9.5

and the tertiary sector affect employmentopportunities. See Table 9.5

SectorEmployment opportunities in India (in percentage)

1973 1983 1993 2004 - 05

PrimarySector 74.4 69.9 64.9 56.5

SecondarySector 10.8 13.3 14.2 18.7

TeritarySector 14.8 16.8 20.9 24.8

• Communication centres

• Transport facilities

• Banking, insurance

•

•

All these categories come under thetertiary sector. Table 9.5 makes it clear thatthe tertiary sector contributes more thanthe of primary and the secondary sectorsto the GDP. This shows the growth of thetertiary sector.

Let us see the factors that perpetuategrowth in the tertiary sector. Someexamples are given below.

• To store and distribute goodsproduced in the primary and thesecondary sectors, the services oftertiary sector are essential. Transportfacilities in the tertiary sector areinevitable for the functioning of theother sectors. By providing services toother sectors, the tertiary sector getsexpanded.

• As income of the people increases, thestandard of living gets improved. Forinstance, people with high income visittourist places and purchase luxurygoods. This will promote thedevelopment of the tertiary sector.

• One of the fastest growing sectors inthe tertiary sector is informationtechnology. Growth in the sectorcreates employment opportunities inthe tertiary sector. As a result thetertiary sector attains growth.

Sectors and employmentopportunitiesLet us see how the changes in thecontribution of the primary, secondary

The data shown in Table 9.7 can bediagrammatically illustrated as follows.

What are the inferences derived from thisdiagram?

• Majority of the people depend on theprimary sector.

• Only 43.5 per cent of the peopledepended on the other two sectorsduring 2004-05.

• As the proportion of employment inthe primary sector comes down, itincreases in the other two sectors.

Find out more inferences. What inferencescan be arrived at by analyzing Table 9.4and 9.5? Follow the model given belowfor writing inferences.

1973 1983 1993 2005

Year

Perc

ent

010

20

30

40

50

60

70

80

Primary Secondary Tertiary

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9• Though the contribution of the primary

sector to the national income comesdown, the proportion of occupation inthis sector comes down onlynegligibly .

• Majority of the people still depend onthe primary sector for their livelihood.

The primary sector is not able to utilizeproperly all the persons engaged in thatsector. Even when some of them arewithdrawn from that sector, the totalproduction will not be affected.

Classification in the employment sectorPeople around us engage in differentactivities. You may remember that thesepeople were categorized and includedearlier in a table.

• Out of them, which categories aregetting permanent employment?

If workers are protected legally andentitled to get benefits, they are called'organized workers'. What are the rightsand benefits of workers in the organizedsector?

• Job security• Minimum wage as per law• Fixed working hours• Remuneration for overtime work• Leave with pay• Pension

•

Make an enquiry as to whethergovernment employees get all thesebenefits.

Those who are not entitled to get rightsand benefits like organized workers arecalled "unorganized workers".People working in the agriculture sectorare an example for workers in theunorganized sector. They have no fixed

working hours. Their wages are lowcompared to those working in theorganized sector.

Prepare a table consisting ofunorganized workers and mentiontheir peculiarities.

In India, it is estimated that 7 per cent ofthe labour force engage in the organizedsector and the rest 93 per cent in theunorganized sector.

Out of the people who engage in theunorganized sector, 80 per cent of themare employed in the rural areas. They arelargely engaged in agricultural activities.The other sectors in which they work aresmall scale trade, construction, transport,etc.

Prepare a note on the problems facedby the unorganized workers in yourregion.

Public sector and private sectorSome of the important production unitsin India and Kerala are given below

• Integral Coach factory

• Hindustan Motors

• Cochin Refinery

• FACT

•

•

•

•

Is the control of these units vested withthe government? Which of them are underthe complete control of the government?When the ownership of production unitsis completely vested with the government,these institutions are called "public sectorundertakings". As against this, if theownership is vested with private

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9individuals or companies, they are put inthe category of "private sectorundertakings".

Expand the list given above by addingmore undertakings and enter them in thetable given below after classifying them.

Ownership

Private sector Public SectorUndertakings Undertakings

$ $

$ $

$ $

$ $

Apart from the public and the privatesectors there are joint sector andco-operative sector in India. There areundertakings operating in these twosectors. Joint sector is the coordination ofthe public and the private sectors.

Public sector undertakings work not onlyfor profit but also for public welfare.Society expects many welfare activitiesfrom the government. The private sector,which operates for profit, cannot meetthese goals. Public sector fulfills this andsome of the activities that benefit thepublic are the following.

• Road development

• Dam construction

• Hospital

•

Government undertakes these activities,not for the profit but with a view topromote the welfare of the people.

Are there any activities of the governmentsimilar to these in your region? Make aproper enquiry and list them.

SeminarWill the expansion of the public sector help to increase public welfare? You can preparea seminar paper on the topic and present it in the class.• When various sectors of the economy operate interdependently, progress is realized.

Substantiate it with an example from your region.• Examine the peculiarities of Indian economy and state which of the following

statements are applicable to India.• The contribution of the tertiary sector to GDP is less than that of the other two

sectors.• The contribution of the secondary and the tertiary sector to GDP is on the rise.• The contribution of the tertiary sector to GDP during 2007-08 was less than 50%.• In terms of the share to GDP and the proportion of employment availability,

the primary sector played a vital role in the early phase of development.• More than 50% of people in India are engaged in the primary sector.

• The workers in the organized sector are more secure than workers in unorganizedsector. Substantiate it.

• List the important public sector undertakings in India and mark them in the mapof India.

Follow up activities