Indian Economy Sectors - Classification and Interdependence

SECTORS OF
INDIAN ECONOMY
social science
CBSE- Class-10
8/8/2021
Modern English school.
Pankaj Saikia…. 2020.
Pankaj Saikia-2021

Classification of human activities
P.Saikia-2020
8/8/2021 Pankaj Saikia-2021

Economic activities
It includes the activities which are performed for the
purpose of earning money or money’s worth. In other
words activities that produce something the value of
which can be measured in terms of money.
Example : Making furniture by a carpenter, Editing
text by an editor of a news paper, Teacher teaching
students in class. Etc.
P.Saikia-2020

Non-Economic activities
It includes the activities which are not performed for
the purpose of earning money or money’s worth but to
satisfy some emotional, physiological or psychological
needs.
Example : Playing for enjoyment Going out for
recreation, Mother teaching her child at home, taking
care of pet, Etc.
P.Saikia-2020

Classification of Economic Activity

SECTORS OF INDIAN ECONOMY
CLASSIFICATION -1
P.Saikia-2020

PRIMARY SECTOR
Primary sector refers to the economic activities in
which natural goods are produced either through
direct extraction from nature or by using some
natural or biological process. It is also called
Agriculture and related sector .
Example—Agriculture , Mining, Fishing, Forestry,
Dairy etc
P.Saikia-2020

Characteristics of Primary Sector
• It produces natural goods.
• Goods are produced by exploiting
from the nature or by using natural
process.
• It is the supplier of raw materials to
secondary sector.

SECONDARY SECTOR
It includes the activities which converts the form of
natural goods into some other more useful forms
through a process of manufacturing.
Example : Yarn is converted in to cloth by weaving,
(Textile mill), sugarcane converted in to sugar ( Sugar
mill), Crude oil converted in to petrol (Refinery), etc.
P.Saikia-2020

Characteristics of Secondary Sector
• It produces manufactured
goods.
• Goods are produced through
a process of manufacturing.
• It is the consumer of primary
sector.

TERTIARY SECTOR
It includes the activities that does not produce
any goods but provide services. It is known as
service sector. These are the activities that
helps in the development of the primary &
secondary sector.
Example: Transportation, Storage, trade,
Communication, Banking, Insurance, etc.
P.Saikia-2020

Characteristics of Tertiary Sector
• It produce services.
• Services are rendered in presence of
users, which are intangible and
cannot be stored for future used.
• It assist the Primary and Secondary
sector.

Difference between Primary and
Secondary sector
Primary Sector Secondary Sector
It produces natural goods. It produces manufactured
goods.
Goods are produced by
exploiting from the nature or
by using natural process.
Goods are produced through
It is the supplier of secondary
sector.
It is the consumer of primary
sector.

Difference between Primary and
Tertiary sector
Primary Sector Tertiary Sector
It produces natural goods. It produces services.
Goods are produced by
exploiting from the nature or
by using natural process.
Services are rendered in
presence of users, which
are intangible and cannot
be stored for future used.
It is the supplier of secondary
sector.
It assist the Primary and
secondary sector.

Difference between Secondary and
Tertiary sector
Secondary Sector Tertiary Sector
It produces manufactured
goods.
It produces services.
Goods are produced through
Services are rendered in
presence of users, which
are intangible and cannot
be stored for future used.
It is the consumer of primary
sector.
It assist the Primary and
secondary sector.

The 3 Sectors Are Dependent On Each Other

Interdependence of Three Sectors

Interdependence of three Sectors
• All the three sectors Primary, Secondary and
tertiary are dependent on each other.
• As all the three sectors are interdependent.
the product or services reach in to the hand
of the consumers with the collective
contribution of all three sector.
• For development of one sector, development
of other sector is very important as they can
not work independently.

Primary sector is dependent on
Secondary sector
• For market- Secondary sector purchased
the goods produced by the primary sector.
• For Tools- Various tools used by the
primary sector produced by secondary
sector.
• For other inputs like fertilizer- Produced by
secondary sector.

Primary sector is dependent on
Tertiary sector
• For Trade- Tertiary sector facilitate the
sale of goods produced by primary
sector.
• For services like transportation,
Banking, insurance, power, etc.
• For Ideas and technology- Developed
by tertiary sector through research.

Secondary sector is dependent on
Primary sector
• For Raw Material- It gets raw materials
from the primary sector. E.g. Sugar cane
for sugar mill.
• For Source of Energy- such as natural
gas, coal, fire wood, etc.
• For food- People working in secondary
sector gets food from primary sector.

Secondary sector is dependent on
Tertiary sector
• For Trade- Tertiary sector facilitate the
sale of goods produced by secondary
sector.
• For services - Like transportation,
Banking, insurance, power, etc.
• For Ideas and technology- It uses the
ideas and technology developed by
tertiary sector.

Tertiary sector is dependent on
Secondary sector
• For market- Secondary sector purchased
the services of the tertiary sector.
• For Tools- Various tools used by the
tertiary sector produced by secondary
sector.- Seasor for Barber.
• For other inputs - Medicine for
treatment, Polish for shoe cleaning, etc.

Tertiary sector is dependent on
Primary sector
• For market- Primary sector is the buyer of
the services of the tertiary sector like
transportation.
• For food- People working in secondary
sector gets food from primary sector.
• Base of services- Some extraction sites of
primary sector provides the opportunity of
services like tourism.

Comparing Three Sectors
• Activities under Primary, Secondary and
Tertiary sector produces a large number of
goods and services, and a large number of
people involved in those activities. Moreover,
most of the time a good or service become
consumable with the collective contribution of
all the three sectors. Therefore comparing the
performance of three sector is not easy. For
this reason the economists classified the goods
and services in to two broad groups-
Intermediate Goods and Final Goods.

INTERMEDIATE GOODS
• The goods or services that are used
in production of some other goods or
services are known as intermediate
good.
• For example-
• Row cotton used in producing cloths.
• Sugarcane used in producing sugar.
• Milk used in making butter. Etc.

FINAL GOODS
• The goods or services that are
readily available for consumption or
no further processing is needed to
make ready for consumption are
known as Final Goods.
• For example-
• A pencil.
• A Car
• A packet of bisquite. Etc.

GROSS DOMESTIC PRODUCT
• The sum of the monetary value of
final goods and services produced
within a country in a year is called
Gross Domestic Product (GDP).
• Here-
• Gross refers - Total or sum
• Domestic refers- A political territory
• Product refers- Monetary value of final
products

Why only final goods
• The value of only final goods and
services are considered in estimating
GDP because the value of final goods
already include the value of all
intermediate goods or services used
in production of the final good. It is
done to avoid multiple counting of
same product or service.

GDP estimation in India
• The central statistics office under
the Ministry of Statistics and
Progremme Implementation
estimates the GDP of India by
collecting and compiling the data on
production from various
departments of the state
governments and union territories.

Historical change in sectors in terms
of contribution to GDP

Conclusion derived from the data
• The production of all the three
sector is increasing but the growth
rate of different sectors are
different.
• With development the contribution
of primary sector to GDP is
decreasing whereas the contribution
of Tertiary sector is increasing.

Historical change in sectors in terms
of Employment

Conclusion derived
• The Primary sector is the leading
employment provider in all the time.
• There is a gradual shift of employment
from Primary Sector to Secondary and
Tertiary Sector.
• Percentile increase in employment of
Tertiary sector is much lower in
comparison to percentile increase in
contribution to GDP.

Reason for low productivity of
primary sector
• The Primary sector is still using poor and
comparatively less advanced technology .
• Infrastructure for primary sector is not
well developed.
• Productivity of primary sector is
dependent on natural resources which is
limited and decreasing day by day.
• More number of people are working in
primary sector than exactly required.

Disguised Unemployment
The condition of employment in
which more people are engaged in a
work than the number of people
exactly required.
The work can be continued smoothly
even after removing some of the
worker working there.

DIFFERENCES
Open unemployment
• People are not in work
at all.
• They have no income.
• They are in search of
employment.
• As it is clearly visible,
easier to solve.
Disguised unemployment
• People are apparently in
work.
• They earns some but less
than their potential.
• As they are in work they
do not search other
employment.
• It is not open and hidden
therefore difficult to
solve.

Reasons for growth of Tertiary Sector
1. Increasing demand for basic
services.
2. Development of primary and
secondary sector.
3. Increase in disposable income.
4. Introduction of new services.
5. Emergence of new laws.

Underemployment in Sectors
Disguised unemployment is not seen
only in primary sector. It exist in
other sectors too.

SECTORS OF INDIAN ECONOMY
CLASSIFICATION 2:
ON THE BASIS OF
THE CONDITION
OF Employment
ORGANISED
SECTOR
UNORGANISED
SECTOR
CONTINUE

Organised Sector
The conditions of employment are governed by
laws of the Government.

Unorganised Sector
The activities in which the conditions of
employment is not governed by any law.

DIFFERENCES
Organised Sector
• Conditions of employment
like salary, hours of work,
etc. governed by laws.
• There is formal contract of
appointment and letter is
issued.
• Fixed hours of work and
regular income.
• Gets paid leave and leave
with pay.
Unorganised Sector
• No law controls the
condition of employment.
• Neither formal agreement
nor appointment letter is
issued.
• No fixed hours of work
and uncertain income.
• Neither paid leave nor
leave with pay

DIFFERENCES (Continued)
Organised Sector
• Gets Job Security.
• Gets after retirement
benefit.
• Avails benefit like medical,
insurance, housing, child
education, etc.
• Avails facilities like
provident fund, gratuity
etc.
Unorganised Sector
• No Job security. At any time
they are prone to loss the
job
• No after retirement benefit.
• No other benefit as availed
by the workers in organized
sector.
• No provident fund, gratuity
and other benefit.

Problems faced by the workers
in unorganised sector
• No law to govern their working conditions like salary
or wages, working hours, termination, etc. workers are
bound to work as per decree of the employer.
• Workers do not have job security and at any time there
is a chance of losing the job.
• Income in this sector is neither regular nor secured.
• They do not get benefits like medical, pension,
insurance, paid holidays and leave, provident fund,
etc. generally avail by workers of organised sector.

Why it is important to protect the
workers in unorganised sector
• Around 92% of the country’s working
population is working here with many
problems, therefore it is essential to
protect their interest .
• Most of basic goods like food and other
agriculture base products and services
are provided by the unorganised sector
without which the economy of the
country will paralyzed.

Why it is important to protect the
workers in unorganised sector (cont.)
•It is the highest contributing sector
of the economy; therefore people
working there must be protected.
• Many law and order situation arises
in different times due to lake of
proper governance in unorganised
sector; therefore it is important to
have some rules and regulations to
avoid those

Measures to protect the workers in
unorganised sector
• Creating more employment in organised sector
• By developing Infrastructure facilities.
• Providing subsidised facilities to the workers in the
unorganised sector through Direct Benefit Transfer
(DBT)
• By making some laws to regulate the works in
unorganised sector.
• Developing mechanism for strict implementation of
the laws.

When a person is willing to work at the
prevailing wage rate but fails to get a job,
it is called unemployment.

When a person can be said as
unemployed.
• He/she must be within the age of 18 to 60
years.
• Must have the required skill to do the job what
he or she is willing to do.
• Must be ready to work at the prevailing rate
of wage in the market.
• Must have the willingness to work.
• Must have the legal approval to do the job he /
she desired.

Why unemployment is a problem?
• Unemployed people consumes with the income
of those who are in work. They creates an
economic burden on the employed population.
• Unemployment leads to decrease in Per Capita
Income of a country.
• Unemployment itself is an wastage of most
valuable human resource.
• Unemployed often leads people to be involved
in socially or legally undesirable activities in
order to earn livelihood.

GOVERNMENT AIDED SCHEMES TO FIGHT
UNEMPLOYMENT
Government, from time to time, announces and
implements various employment scheme to fight
unemployment or hidden employment. Schemes like
NREGA (National Rural Employment Guarantee Act) is
the latest scheme announced by Government in 2004.
This programme guarantees a minimum of 100 days of
employment to at least one person from every rural
household. This is part of government’s effort to ensure
the ‘Right to Work’ to the rural poor citizen.

Measures to create Employment
• Development of Infrastructure
facilities.
• Setting up of Industries.
• Providing skill base vocational
Training.
• Easy and affordable credit
facilities.

Classification
(on the basis of ownership)

Public Sector
The activities or organisations that are
owned and controlled by government.
Example: BSNL, SBI, ONGC, etc.

Characteristics of Public Sector
• Owned and controlled by Government.
• Main objective is public welfare and
provides goods and services at reasonable
price.
• Mostly works in the field of basic
necessity of general public .
• As the general public is the real owner of
the government money, the public sector
is accountable to the general public. .

Private Sector
The activities or organisations that are
owned by private individual or group
of individuals.
Example;- Reliance, Book House, etc.

Characteristics of Private Sector
• Owned and controlled by individual or group
of individuals.
• Main objective is earning profit for the owner.
• Focus is on high level of productive efficiency
and competition.
• Mainly works in the field with higher potential
for earning profit.
• Managed professionally abiding the general
laws of the government

Public and Private Sector
Public Sector
• Own by Government.
• Run on service motive.
• Mostly provides the basic
services like healthcare,
education, transport, etc.
• Better facilities to employees
but low productivity.
• Cannot work professionally
due to high level of political
interference.
Private Sector
• Own by individual or group
of Individual.
• Run on Profit motive.
• Provides relatively luxury
goods and services like
Restaurants, Theaters, etc.
• Poorer facilities to employees
but high productivity.
• High level of efficiency due to
professional management and
autonomy.

Importance of Public Sector
1. As the public sector works with service
motive, it provides goods and services at a
reasonable price which are affordable
even to the poor. Ex. Government Medical
Services.
2. Public sector is needed to restrict the
speculative private sector from their
monopolistic practices in pursuit of
earning more profit. Ex. Indian Airlines.

Importance of Public Sector (cont.)
3.Some activities related to economic and
political security of a country must be
under the control of the government. For
example- Printing of currency note.
4.Private sector mostly concentrated in
areas with higher profitability. Therefore
public sector must work to satisfy the
need of the people living in backward
areas. For example: Government schools.

Importance of Public Sector (cont.)
5. The private investors are either unable
or reluctant to invest in activities requiring
huge cost and long time to recover it. The
Public Sector must invest in such areas as
those are mandatory for development of
infrastructure. For example; Road
Construction, Dam Construction, Space and
atomic research, etc.

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