SECTORS OF

INDIAN ECONOMY

Classification of Indian economic

sectors

Indian Economy

Primary

Secondary

Tertiary

PRIMARY SECTOR

• Activities undertaken by directly using natural resources. Example—Agriculture, Mining, Fishing, Forestry, Dairy etc.

• It is called primary sector because it forms the base for all other products that we subsequently make.

• Since most of the natural products we get are from agriculture, dairy, forestry, fishing it is also called Agriculture and related sector.

• When the economic activity depends mainly on exploitation of natural resources then that activity comes under primary sector.

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

Agriculture

Fishing

ForestryExtraction

Of Oil & Gas

Mining

SECONDARY SECTOR• It covers activities in which natural products are

changed into other forms through ways of manufacturing that we associate with industrial activity.• It is a next step after primary, where the product is not

produced by nature but has to be made.Some process of manufacturing is essential, it could be in a factory, a workshop or at home.• Example: Using cotton fibre from plant, we spin yarn and

weave cloth; using sugarcane as a raw material we make sugar or gur; we convert earth into bricks.• Since this sector is associated with different kinds of

industries, it is also called industrial sector.• When the main activity involve manufacturing then it is

the secondary sector. All industrial production where physical goods are product come under the secondary sector.

Manufacturing Electricity

Construction Water Supply

Oil Refining

TERTIARY SECTOR

• These are the activities that help in the development of the primary & secondary sector.• These activities by themselves do not produce good but

they are an aid and support to the production process.• Example: Transportation, Storage, Communication,

Banking• Since these activities are generate services rather than

goods it is also called Service sector.

Banking &

Finance

Transport

Real Estate

Tourism

Information Technology

How do we count the various goods and

services and know the total production in each

sector?

• The value of final goods and services produced in each sector during a particular year provides the total production of the sector for that year. • And sum of production in three sectors give Gross

Domestic Production—GDP of the country.• It is the value of all final goods and services produced

within the country during a particular year.• GDP shows how big the economy is.• Measuring GDP is undertaken by the Central

government ministry , with the help of various govt. Departments of Indian states and union territories.

GROSS DOMESTIC PRODUCT (GDP)

Historical change in sectors

Three Stages

Initial

Second

Third

After observing the changes that have come in the development patterns of the sectors, it has been found that• In the Initial stages of the development the Primary Sector was the

most important sector of economic activity.• As the methods of farming changed and agricultural sector began

to prosper, it produced much more food than before and many people could take-up many other activities which led to the increase in number of activities. • However at this stage most of the goods produced were natural

products from the primary sector, hence most people were employed in this sector.

INITIAL STAGE

• Over a long time(more than hundred years or so) because new methods of manufacturing were introduced, factories came up and started expanding.• People began to work in factories in large numbers, and

also people started using factory goods in large numbers as they were cheap. • Secondary sector gradually became the most important

in total production and employment. There was a shift and the importance of the sectors also changed.

SECOND STAGE

THIRD STAGE• In past hundred, there has been a further shift from

Secondary to Tertiary sector in the developed countries.• The service sector has become the most important in

terms of total production.• Most of working people are also employed in the

service sector.

RISING IMPORTANCE OF TERTIARY SECTOR IN PRODUCTION

• Over the past 30 years, between 1997 and 2003, while production has increased in all 3 sectors, it has increased the most in tertiary sector.• The necessity for ‘basic services’ like hospitals,

educational institutions, post and telegraph services, police stations, courts, administrative offices, defense, transport and banking services have increased with the increase in population.• The development in the industrial and agricultural sector

has increased the need for service such as transport, storage and trade. • As the income of people increased the demand for

services in tourism, retailing, catering, and elite education also increased.• With higher income people have started traveling long

distances for work and education, resulting in the need for increased services in the transport and communication sector.

ROLE OF TERTIARY SECTOR IN INDIA

• Increasing share in the GDP• Providing employment• Providing support to other sectors• Contribution to exports • Increase of software services in Indian economy• Growth in business services• Growth of engineering services• Rise of financial services• Growth of transport, travel and insurance• Growth of service concerning personal, cultural and

recreational

WHERE ARE MOST OF THE PEOPLE EMPLOYED? • The primary sector continues to be the largest employs

even in the year2000.• Even though industrial output or production of goods

went up by 8 times during the period, employment in the industry went up by 2.5 times.

• More than half of the workers in the country are working in the primary sector mainly in the agriculture.

• The secondary and tertiary sectors produce three fourths of the produce when they employ less than half of the people.

UNDER-EMPLOYMENT

It is a situation, where people are apparently working but all of them are made to work less than their potential.• if few people move out , it will not effect the production.• it is hidden in contrast to the open unemployment where

a person is clearly or visibly without job.• it is also called disused unemployment.• this underemployment also happens in the other sectors

for example there are thousands of casual workers in service sector in the urban areas as painters, plumbers, repair persons etc.

NREGA

• National Rural Employment Guarantee Act 2005.• Started by the Central

govt.• Made a law

implementing Right to work in 200 districts of India.• All those who are in

need of work will get guaranteed 100 days work and if the govt. fails to do so, it will give unemployment allowances to them • The work will of the

type which will in future help to increase the production from land.

Sectors

Organised Unorganised

Classification of sectors on basis of

employment

ORGANISED SECTOR

• The sector, which is registered follows government rules and regulation, have employees and employers union is called organised sector. The company form of business comes under organised sector.• Terms of employment

are regular, so people have assured work.• Registered by the

government.• Follows rules and

regulations given in various laws• Has some formal

processes and procedures.

BENEFITS FROM THE EMPLOYERS

Fixed timingRegular salaryPaid leaveProvident fundGratuityMedical allowancesPension after

retirementSecured employmentPaid for overtime

UNORGANISED SECTOR• The sector which is not

following the prescribed forms and the modus operandi which is standardized and centralized. It more of a perceived factor rather being an implied one• Characterised by Small

and scattered units which are largely outside the control of the government.• There are rules and

regulations but these are not followed.• Low paid jobs and are

not regular.

DISADVANTAGES FROM THE EMPLOYERS• No provision for paid leave, overtime, pension, etc.• No job and salary security • No fixed timing• No medical allowance

HOW TO PROTECT WORKERS IN THE UNORGANISED SECTOR?

• Setting up small scale industries in semi-rural areas.• Implementing many programs such as NREGA 2005.• Creating job opportunities in service sector [schools, tourism, hospitals]• Allow credits at a lower rate.

Classification of sectors on basis of

ownership

SectorsPrivate

Public

PRIVATE SECTOR

• The private sector is that part of the economy, sometimes referred to as the citizen sector, which is run by private individuals or groups, usually as a means of enterprise for profit, and is not controlled by the state • Organised by private

individuals.• Does not provide fixed

employment & fixed working hours to workers.• Main aim is to make

many profits for themselves.• Examples - Birla,

Reliance, Tata, etc.

PUBLIC SECTOR• The public sector refers to

the part of the economy concerned with providing various government services.• The public sector might

provide services that a non-payer cannot be excluded from services which benefit all of society rather than just the individual who uses the service.• Organised by government• Provides facilities to the

workers like - Fixed employment , Fixed working hours.• Main aim is to provide

public welfare.• Examples- Parks, hospitals,

etc.

ADVANTAGES AND DISADVANTAGESPRIVATE PUBLIC

Advantages:• More employment opportunities• Good start• Fast growth• Better job satisfaction

Disadvantages:• Stressful environment• Fear of job cuts• Cut-throat

competition

Advantages:• Better job security• Power and privilege• Better perks and

facilities• A laid-back

environmentDisadvantages:• Starting is slow• Growth is slow • Lesser job

opportunities

BY:

AAYUSHI AGARWALNAIYA SHAH

THANK YOU