Understanding the sectors of Indian Economy is important to understand functioning of economy and also GDP Calculation. India’s vibrant economic landscape weaves a tapestry with the threads of its primary, secondary, and tertiary sectors, each playing a distinct role. The journey towards becoming one of the world’s fastest-growing economies deeply influences India, driven by the contributions and interactions of these sectors.
Division of sectors of Economy
Primary Sector
Primary sector involves economic activities closely linked to agriculture and allied nature, e.g. Agriculture, Horticulture, Fishing, Mining etc.
India relies on natural resources such as agriculture, mining, fishing, and forestry. Agriculture, including fisheries and forestry, makes a significant contribution to GDP, with India emerging as a leading producer of various crops and commodities. Government initiatives like the Black and Brown Revolutions have boosted production, but underemployment remains a challenge.
This sector, also known as the “Agriculture and allied sector,” forms the base for all other industries. They are often referred to as “red-collar workers” due to the outdoor nature of their work.
Primary sector is further categorised into Extractive and Genetic industry. The difference between both is given below:
Secondary Sector
The secondary sector involves industries that transform raw materials from the primary sector into finished products. It is known as the industrial sector as it primarily focuses on manufacturing goods rather than producing raw materials. Blue-collar workers are those engaged in secondary activities.
Examples of the manufacturing sector include small workshops producing pots, artisan production, textile mills, steel factories, chemical plants, plastic manufacturers, automobile factories, brewing plants, food processing facilities, and oil refineries.
This sector employs a substantial portion of the workforce and contributes significantly to GDP.
Secondary Sector is further categorised into Manufacturing and Construction industry. The difference between them is given below:
Eight Core Industries:
The Core Industries encompass eight key sectors: electricity, steel, refinery products, crude oil, coal, cement, natural gas, and fertilizers. These industries are referred to as core industries due to their significant influence on overall economic activities and other industrial sectors.
Together, these industries constitute 40.27% of the total weight of all items included in the Index of Industrial Production (IIP). Currently, the Refinery Products Industry holds the highest weight in the Index of Eight Core Industries, replacing the Electricity Industry which previously held the highest weightage.
Tertiary Sector
The activities in the tertiary sector contribute to the advancement of both the primary and secondary sectors. Focuses on providing services rather than tangible goods. Encompasses a wide range of services like IT, consulting, healthcare, education, and transportation. Accounts for the largest share of GDP and has surpassed the primary sector in importance.
While the tertiary sector itself does not directly produce goods, its activities serve as support or assistance for production. Services such as transportation of goods via trucks or trains, banking, insurance, and finance fall under this sector. Similar to the secondary sector, the tertiary sector adds value to products.
Jobs within this sector are commonly referred to as white-collar jobs.
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Interdependency of Sectors
Various sectors of economy are intricately linked, each relying on the other for smooth functioning. This interconnectedness is essential for the efficient operation of the economy as a whole. By examining the relationships between different sectors, we gain insight into how disruptions or changes in one area can have ripple effects throughout the entire system.
To grasp this interconnectedness, consider a cold drink as an example. It consists of water, sugar, and artificial flavor. If there’s a shortage in sugarcane production, obtaining sugar becomes challenging and costly for the cold drink manufacturer. Transporting sugarcane to sugar mills and sugar to the cold drink plant relies on transportation services. Administrative staff play a crucial role in overseeing these movements of goods from farm to factory to shop across various locations. Similarly, farmers require fertilizers and seeds, which are processed elsewhere and delivered to them through transportation.
Furthermore, a functional monetary and banking system is essential at every stage of these activities. This succinctly illustrates the intricate interdependence of all sectors within an economy.
India’s economy thrives on the interplay of its primary, secondary, and tertiary sectors. While the primary sector provides the foundation with its reliance on natural resources, the secondary sector transforms these resources into finished goods, and the tertiary sector offers vital services that support economic activities.
Together, these sectors drive India’s economic growth and contribute to its evolving landscape, offering diverse opportunities for employment and advancement.
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