Sectors of Indian economy
What is economy ?: What is economy ? Economy is a framework in which economic activities take place and therefore gives income in return . we divide them into sectors . We classify sectors into different criteria i.e.,: We classify sectors into different criteria i.e., Nature of job Working conditions Ownership On the basis of nature of job , we divide them into -: On the basis of nature of job , we divide them into - Primary sector Secondary sector Tertiary sector Primary sector : Primary sector When the economic activity depends mainly on exploitation of natural resources then that activity comes under the primary sector. Agriculture and agriculture related activities are the primary sectors of economy. Other examples are – dairy , fishing , forestry . Secondary sector : Secondary sector 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. Tertiary sector : Tertiary sector 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 service sector. Evolution of an Economy from Primary Sector Based to Tertiary Sector Based : 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 surplus people’s need for other products increased. This led to the development of secondary sector. The growth of secondary 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 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. Economic activities are highly interdependent on each other : Economic activities are highly interdependent on each other To understand this interdependency, let us take an example of a cold drink. A cold drink contains water, sugar and artificial flavour. Suppose if there is no sugarcane production then procuring sugar will become difficult and costly for the cold drink manufacturer. Now to transport sugarcane to sugar mills and sugar to the cold drink plant needs the services of a transporter. A person or system of persons is required to maintain and monitor all these movements of goods from farm to factory to shop in different locations. PowerPoint Presentation: That is where role of administrative staffs comes. Let us go back to the farmer. He also needs feritlisers and seeds which is processed in some factory and which will be delivered to his doorstep by some means of transportation. To top it all at every step of the se activities we require the proper monetary and banking system. So, in a nutshell this describes how interrelated all sectors of an economy are. Comparing the three sectors: Comparing the three sectors We count only final goods and services and not the intermediate goods as the value of final gods already includes the value of all intermediate goods . For example , the value of Rs. 60 for the biscuits ( final good ) already includes the value of flour Rs. 10 similarly , the value of all other intermediate goods would have been included . PowerPoint Presentation: To count the value of the flour and the wheat separately is therefore not correct because then we would be counting the value of the same things a number of times first as wheat then as flour and finally as biscuit . 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 . The sum of production in the three sectors gives us the GDP . The finance ministry , with the help of various government department of all the Indian states and union territories estimates the GDP . Primary , secondary and tertiary sector in India : Primary , secondary and tertiary sector in India Tertiary sector is not playing any significant role in development of indian economy . . .: Tertiary sector is not playing any significant role in development of indian economy . . . Tertiary sector in India employs many different kind of people . At one end there are a limited no, of services that employs highly skilled and educated workers . At the other end there are large number of workers engaged in services such as small shopkeepers , repair people , transport people . These people barely manage to earn for life and yet they perform these services because no other alternate opportunities for work are available for them Hence only a part of this sector is growing importance . On the basis of working conditions , we divide them into : On the basis of working conditions , we divide them into Organized sectors Unorganized sectors PowerPoint Presentation: Organized sector Unorganized sectors The organized sectors cover those enterprises where the term of employment is regular . The unorganized sectors is characterized by small and scattered units which are largely outside the control of government They are registered by government , they follow rules and regulations and various laws such as , the factories act , minimum wages act , payment of gratuity , shops and establishments act . Unorganized sector does not follow any rules and regulation pass by the government . Workers in the organized sector are paid according to prescribed scale . They also get payment in time on regular basis , Most of the jobs are low paid and often not regular . They get annual increment and other allowances such as provident fund , payment during holidays , paid leave , gratuity , medical benefits , safe working conditions There is no provision of over time , paid leave , holidays , leave due to sickness etc. They can form trade unions They cannot form trade unions Workers under unorganized sector need protection . : Workers under unorganized sector need protection . They are paid low salaries , therefore they are not able to fulfill even there basic needs . They are exploited . Employment is there but not on regular basis they can be thrown out any time without any rhym or reason . Other than salary which is very low they don’t get any other benefits . These workers also face social discrimination . protection and support to the unorganised sector is both necessary for economic and social development . On the basis of ownership , we divide them into , : On the basis of ownership , we divide them into , Public sector Private sector PowerPoint Presentation: Public sector Private sector It is owned by state or central government . It is owned by private individuals . They work with the main motive of providing service to the public They work for profit earning . It is guided by social objectives like development of backward regions , creation of employment , and equitable distribution of wealth . In this sector social objectives are not important it is subjected to strict financial control of the government . For example , railways , air india , LIC , RBI , FCI . Foe example , reliance industries limited , tata iron and steel company limited . Role of government / public sector in the economic development of the country . : Role of government / public sector in the economic development of the country . Infrastructure : construction of roads , bridges , generating electricity , irrigation , education etc. are several things needed by society , but private sector could not invest as large amount of money is required . Also collecting money from thousand of people is not easy . Hence government has to undertake such heavy spending and ensure creation of infrastructure . PowerPoint Presentation: Strong industrial base : growth of public sector in iron and steel , coal , engineering , petroleum has created a strong industrial base for further industrialization . Balanced regional development : to reduce and overcome regional disparities in regional industrial development . The government uses power and resources to set up industries in undeveloped and under – developed regions PowerPoint Presentation: Public welfare : providing health , housing facilities , safe drinking water , food and nutrition for poor are the primary responsibilities of the government these activites should be taken up the government as private sector would like to maximize there profits and has no interest in public welfare .