Sectors of Indian Economy: Primary, Secondary & Tertiary

Sectors of Indian Economy Class 10 NCERT Notes

Economic activities are classified into groups using some important criterion. These groups are known as sectors of an economy.

The Indian economy can be classified into various sectors on the basis of ownership, working conditions of the workers and the nature of the activity being performed.

Economic activities are activities that result in the production of goods and services. Sectors are the group of economic activities classified on the basis of some criteria.

What are the different sectors of Indian economy?

Three types of classification are:

Classification of economic activities on the basis of nature of activity

1. Primary Sector
2. Secondary sector
3. Tertiary sector

Classification of economic activities on the basis of conditions of work

1. Organised sector
2. Unorganised sector

Classification of economic activities on the basis of ownership of assets

1. Public sector (government’s control)
2. Private sector (controlled by individual or group of individuals)

 People around us are engaged in different activities to earn a livelihood, some may be producing goods while others may be delivering services.

SECTORS OF INDIAN ECONOMY

Three Sectors of Indian Economy: Primary, Secondary & Tertiary

On the basis of nature of activity Indian economy can be classified into primary, secondary and tertiary sectors.

Primary Sector of Indian Economy

» Primary Sector is directly dependent on the environment for manufacture and production.

» A primary sector is a sector whereby the raw materials are extracted from the earth.

» Primary Sector includes those activities which lead to the production of goods by exploitation of natural resources.

» Examples of primary sector activities are agriculture, fishing, mining, animal husbandry etc.

» In India, agriculture is the biggest example of the primary sector.

» However, forestry and fishing can also be cited as other examples of this particular sector.

» Primary sector is also known as agriculture and related sector.

» It produces natural products like cotton, milk, fruits, wheat, fish, rubber etc.

Primary sector are 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 .

The Secondary Sector

» A secondary sector is a sector whereby the raw material that is extracted from earth is converted to semi- finished goods or finished goods.

» Secondary sector activities of the secondary sector follow the primary activities, in which the natural products are changed to manufacture different commodities.

» When the main activity involves manufacturing then it is the secondary sector.

» All industrial production where physical goods are produced come under the secondary sector thus, the secondary sector is also called the industrial sector.

» An agricultural product like cotton is woven into cotton fabric or sugar cane is processed to produce sugar.

» Secondary Sector covers activities in which natural products are changed into other forms through ways of manufacturing that we associate with industrial activity.

» Product is not produced by nature but has to be made and therefore some process of manufacturing is essential.

» It includes those activities which result in the transformation of natural products into other forms by manufacturing.

» It produces manufactured goods like cloth, sugar, bricks etc.

» It is also called the industrial sector as this sector has come to be associated with different kinds of industries.

» In the secondary sector of the national economy, natural ingredients are used to create products and services that are consequently used for consumption.

» Examples of secondary sector activities are manufacturing and construction.

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 the 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 a plant, we spin yarn and weave cloth; using sugarcane as a raw material we make sugar , we convert earth into bricks. Since this sector is associated with different kinds of industries, it is also called industrial sector.

Tertiary Sector

» Tertiary Sector activities help in the development of the primary and secondary sectors.

» These activities, by themselves, do not produce a good but they are an aid or a support for the production process.

» For example, goods that are produced in the primary or secondary sector would need to be transported by trucks or trains and then sold in wholesale and retail shops also called the service sector.

» A tertiary sector is a sector that transports and distributes goods to retailers or wholesalers.

» Like the secondary sector, it also provides value addition to a product.

» This sector is also known as the service sector.

» Tertiary Sector includes those activities that in the development of the primary & secondary sectors by supporting the production process.

» Tertiary Sector does not produce goods but generates services like transportation, communication, basting etc.

» Examples of tertiary sector activities are banking, insurance, finance etc.

» Tertiary sector also includes certain new services based on information technology like cyber cafes, ATM booths, call centres, software companies.

When the activity involves providing intangible goods like services then this is part of the tertiary sector. Financial services, management consultancy, telephony and IT are good examples of the service sector. Like the secondary sector, it also provides value addition to a product. This sector is also known as the service 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 the sum of production in the three sectors gives what is called the Gross Domestic Product (GDP) of a country.

GDP- the value of all final goods and services produced within a country during a particular year.

GDP shows how big the economy is.

During early civilisation, all economic activity was in the primary sector. When the food production became surplus people’s need for other products increased. This led to the development of the secondary sector. The growth of secondary sector spread its influence during the industrial revolution in the nineteenth century. After growth of economic activity, a support system was the need to facilitate the industrial activity. Certain sectors like transport and finance play an important role in supporting the industrial activity. Moreover, more shops were needed to provide goods in people’s neighbourhood. Ultimately, other services like tuition, administrative support developed.

Sectors of Indian Economy: Organised and Unorganised Sectors

The three economic sectors (Primary, secondary and tertiary) can be further classified under the Organised or Unorganised sectors.

» Organised Sector is a sector where the employment terms are fixed and regular, and the employees get assured work. Unorganised sector is one where the employment terms are not fixed and regular, as well as the enterprises, are not registered with the government.

» The unorganised sector, covers most of the rural labour and a substantial part of urban labour. lt includes activities carried out by small and family enterprises, partly or wholly with family labour.

» An unorganised worker is a home-based worker or a self-employed worker or a wage worker in the unorganized sector and includes a worker in the organized sector who is not covered by any of the Acts pertaining to welfare Schemes as mentioned in Schedule-II of Unorganized Workers Social Security Act, 2008

» The Organised sectors can also be define as a sector, which is registered with the government is called an organised sector. In this sector, people get assured work, and the employment terms are fixed and regular. A number of acts apply to the enterprises, schools and hospitals covered under the organised sector.

» Protection and support for the unorganised sector workers is very necessary for both economic and social development.

Sectors of Indian Economy: Public and Private Sectors

The three economic sectors (Primary, secondary and tertiary) can be further classified under the Public and Private sector on the basis of who owns the assets (company) and who is responsible for delivering the service.

» The public sector is the part of the economy concerned with providing various governmental services. The composition of the public sector varies by country, but in most countries the public sector includes such services as the military, police, infrastructure (public roads, bridges, tunnels, water supply, sewers, electrical grids, telecommunications, etc.), public transit, public education, along with health care and those working for the government itself, such as elected officials. The public sector might provide services that a non-payer cannot be excluded from (such as street lighting), services which benefit all of society rather than just the individual who uses the service.

» The purpose of the public sector is not just to earn profits. Governments raise money through taxes and other ways to meet expenses on the services rendered by it.

» The private sector is the 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 (areas of the economy controlled by the state being referred to as the public sector).

» Activities in the private sector are guided by the motive to earn profits. To get such services we have to pay money to these individuals and companies.

Which is the largest sector in India?

India is also the third largest startup hub in the world with over 3,100 technology start-ups in 2014-15 The agricultural sector is the largest employer in India's economy but contributes to a declining share of its GDP (17% in 2013-14). India ranks second worldwide in farm output.

Which sector contributes the maximum to India's GDP?

India accounts for 7.68 percent of total global agricultural output. GDP of Industry sector is $495.62 billion and world rank is 12. In Services sector, India world rank is 11 and GDP is $1185.79 billion. The contribution of Agriculture sector in the Indian economy is much higher than world's average (6.1%).

What is the service sector in India?

India's services sector covers a wide variety of activities such as trade, hotel and restaurants, transport, storage and communication, financing, insurance, real estate, business services, community, social and personal services, and services associated with construction.