economic sectors

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A nations economy can be divided into various sectors to define the proportion of the population engaged in

activity sector. This categorization is seen as a continuum of distance from the natural environment. The contin

starts with the primary sector, which concerns itself with the utilization of raw materials from the earth suc

agriculture and mining. From there, the distance from the raw materials of the earth increases.

Primary Sector

The primary sector of the economy extracts or harvests products from the earth. The primary sector include

production of raw material and basic foods. Activities associated with the primary sector include agriculture

subsistence and commercial), mining, forestry, farming, grazing, hunting and gathering, fishing, and quarrying

packaging and processing of the raw material associated with this sector is also considered to be part of this secto

In developed and developing countries, a decreasing proportion of workers are involved in the primary sector. A

3% of the U.S. labor force is engaged in primary sector activity today, while more than two-thirds of the labor f

were primary sector workers in the mid-nineteenth century.

Secondary Sector

The secondary sector of the economy manufactures finished goods. All of manufacturing, processing,

construction lies within the secondary sector. Activities associated with the secondary sector include metal wor

and smelting, automobile production, textile production, chemical and engineering industries, aeros

manufacturing, energy utilities, engineering, breweries and bottlers, construction, and shipbuilding.

Tertiary Sector

The tertiary sector of the economy is the service industry. This sector provides services to the general population

to businesses. Activities associated with this sector include retail and wholesale sales, transportation and distribu

entertainment (movies, television, radio, music, theater, etc.), restaurants, clerical services, media, tourism, insur

banking, healthcare, and law.

INDIAN SECTORS

Primary Sector

When the economic activity depends mainly on exploitation of natural resources then that activity comes unde

primary sector. Agriculture and agriculture related activities are the primary sectors of economy.

There are many activities that are undertaken by directly using natural resources. Since most of the natural prod

we get are from agriculture, dairy, fishing, forestry, this sector is also called AGRICULTURE AND RELA

SECTOR.Eg--- Dairy, cultivation, mining of mineral ores etc.


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Secondary Sector

When the main activity involves manufacturing then it is the secondary sector. All industrial production w

physical goods are produced come under the secondary sector.

It covers activities in which natural products are changed into other forms through ways of manufacturing tha

associate with industrial activities.The product is not produced by nature but has to be made therefore some process of manufacturing is essential. S

this sector Gradually became associated with different kinds of industries that came up, it is also calle

INDUSTRIAL SECTOR .Eg, Sugar of gur is manufactured form sugarcane, building from bricks and bread

wheat flour etc.

Tertiary Sector

When the activity involves providing intangible goods like services then this is part of the tertiary sector. Fina

services, management consultancy, telephony and IT are good examples of service sector.

These are the activities that helped in development of primary and secondary sector.

These activities do not produce goods but they are an aid or support for the production process.

Since these activities generate services rather goods, the tertiary sector is also called THE SERVICE SECT

Eg,Tranport, storage, communication, banking, trade etc, are some examples of tertiary sector.

Evolution of an Economy from Primary Sector Based to Tertiary Sector

Based

During early civilization all economic activity was in primary sector. When the food production became su

peoples need for other products increased. This led tothe development of secondary sector. The growth of secon

sector spread its influence during industrial revolution in nineteenth century.

After growth of economic activity a support system was the need to facilitate the industrial activity. Certain se

like transport and finance play an important role in supporting the industrial activity. Moreover, more shops

needed to provide goods in peoples neighbourhood.

Ultimately, other services like tuition, administrative support developed.


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Interdependency of Sectors:

To understand this interdependency, let us take an example of a cold drink. A cold drink contains water, suga

artificial flavour. Suppose if there is no sugarcane production then procuring sugar will become difficult and c

for the cold drink manufacturer. Now to transport sugarcane to sugar mills and sugar to the cold drink plant need

services of a transporter. A person or system of persons is required to maintain and monitor all these movemen

goods from farm to factory to shop in different locations. That is where role of administrative staffs comes. Let uback to the farmer. He also needs feritlisers and seeds which is processed in some factory and which will be deliv

to his doorstep by some means of transportation.

To top it all at every step of these activities we require the proper monetary and banking system. So, in a nutshel

describes how interrelated all sectors of an economy are.

HOW GDP OF OUR COUNTRY IS CACULATED?

1. Values of goods and services should be used rather than adding up the actual numbers. Value of goods and serin three sectors are calculated and then added up.

2. Not every good or service that is produced and sold needs to be counted. It is required to add the final goods

services.

3. Intermediate goods are used in producing final goods and services. The value of final goods already include

value of all the intermediate goods that are used in making the final goods.

4. The value of final goods and services produced in each section during a particular year provides the

production of the sector for that year. And the sum of production in the three sectors gives what is called the

domestic product of a country

GDP IS THE VALUE OF ALL FINAL GOODS AND SERVICES PRODUCED WITHIN A COUN

DURING A PARTICULAR YEAR.

5. Measurements of the GDP is done by a central govt. Ministry.This ministry with the help of Various

Departments of all Indian states, collect information relating to total volume of goods and services and their p

and then estimates the GDP.

HISTORICAL CHANGES IN SECTORS---

PRIMARY SECTOR----

1. As the methods of farming changed farmers produce much more food then before.

2. Many people could take other activities also.

3. No. of craftsmen and traders increased.


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4. Buying and selling activities increased.

5. Besides this people are opting jobs of transporters, army and administrators etc.

SECONDARY SECTOR----

1. Over a long time, new methods of manufacturing were introduced, factories came up and started expanding.

2. People who worked in farms, started working in factories.

3. Secondary sector gradually became the most important in total production and employment.

4. Importance of sectors had changed.

TERTIARY SECTORS ---

1. There has been a further shift from secondary to tertiary sector.

2. Service sector has become most important in terms of total production.

3. Most of the working people are also employed in the service sector.

RISING IMPORTANCE OF TERTIARY SECTOR IN INDIA

1. In any country several services such as hospitals, educational institutions, post and telegraph services, p

stations, courts, village administrative offices, municipal corporations, banks, defence, transport, insu

companies etc are required.

2. Development of agriculture and industry leads to development of services like transport, trade, storage etc. Gr

the development of the primary and secondary sectors more would be the demand for such services.

3. As income level rises people start demanding more services like eating out, tourism, shopping, private hosp

private schools, professional training etc. especially in cities.

4. Over the past decade certain new services such as those based on information and communication technology

become important and essential. The production of these services has been rising rapidly.

But remember ---

1. Not all the service sectors are growing equally well.

2. Service sector in India employs different kinds of people.

3. At one end there are a limited number of services that employ highly skilled and educated workers.

4. On the other hand there are a large number of workers engaged in services like small shop keepers, repair per

transport persons etc.

5. These people barely manage to earn a living yet they perform these services because no other job is availab

them.

6. Hence only a part of this sector is growing in importance.


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GROWTH AND STATUS OF DIFFERENT SECTORS IN INDIA.


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Closely observe the given graphs. The first graph shows the rupeewise turnover of various sectors in 1973 and 2

The second graph shows the share of three sectors in the GDP during these 20 years and last graph shows sha

providing employment.

The first graph shows a massive increase in turnover for all these sectors during 20 years, which shows the way

economy grew. The second graph shows that share of agriculture decreased substantially and that of ind

remained static and share of services grew. Particularly the growth of share of services sector was phenomenal

from 35% to 55%.

Now the third graph paints a distressing picture. The share in providing employment was not in tune with the sha

GDP. The agriculture provided employment to 75% workers and this decreased to 60% in 2000, which is not as

drop as agricultures drop in GDP contribution. On the other hand the growth in employment

provided by other two sectors was substantially low.

The meaning of this finding is as follows:

1. Majority of people are still employed in agricultural activities. As agriculture provides seasonal employ

during cropping season so chances of hidden employment are big. Moreover, as history suggests a developed nat

dependency shifts from primary sector towards tertiary sector in all aspects of economic development, so it ca

said that India is still way behind because majority still depend on agriculture.

2. Secondary and Tertiary Sector have failed to generate enough employment opportunities making a pressur

primary sector. Although educated and skilled workforce do get employed in secondary and tertiary sector bu

unskilled and semi-skilled workers there is still shortage of employment avenues.

Other Classifications of Economy Organised Sector


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The sector which carries out all activity through a system and follows the law of the land is called organized se

Moreover, labour rights are given due respect and wages are as per the norms of the country and those of the indu

Labour working organized sector get the benefit of social security net as framed by the Government. Certain ben

like provident fund, leave entitlement, medical benefits and insurance are provided to workers in the organized se

These security provisions are necessary to provide source of sustenance in case of disability or death of the

breadwinner of the family. Otherwise the dependents will face a bleak future.

Unorganised Sector:

The sector which evade most of the laws and dont follow the system come under unorganized sector. S

shopkeepers, some small scale manufacturing units keep all their attention on profit making and ignore their wo

basic rights. Workers dont get adequate salary and other benefits like leave, health benefits and insurance are be

the imagination of people working in unorganized sectors.

Public Sector

Companies which are run and financed by the Government comprise the public sector. After independence India

a very poor country. India needed huge amount of money to set up manufacturing plants for basic items like iron

steel, aluminium, fertilizers and cements. Additionally infrastructure like roads, railways, ports and airports

require huge investment. In those days Indian entrepreneur was not cash rich so government had to start creatin

public sector enterprises like SAIL (Steel Authority of India Limited), ONGC(Oil & Natural Gas Comission).

Private Sector

Companies which are run and financed by private people comprise the private sector. Companies like Hero Ho

Tata are from private sectors.

Government Aided Schemes to Fight Unemployment

Government, from time to time, announces and implements various employment scheme to fight unemployme

hidden employment to help the weaker section of society. Shcemes like NREG (National Rural Employ

Guarantee) is the latest announced by the UPA government in 2004. This programme guarantees a minimum of

days of employment to at least one person from every rural household. This is part of governments effort to en

the Right to Work to the rural poor citizen.


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