Economics-Sectors of the Indian Economy

Topics: Economy, Tertiary sector of the economy, Gross domestic product Pages: 6 (1838 words) Published: March 24, 2013

Chapter –2—Economics
In order to understand the functioning of any economy, we need to study various sectors that it comprise. All around us we find people engaged in different types of activites. CLASSIFICATION OF THE ECONOMIC SECTORS:

The classifications are based on
1.Nature of activity being performed.—Primary, Secondary & Tertiary 2.Working conditions of the workers—Organised & unorganized. 3.Who own the assets/ on the ownership basis.—Public & Private PRIMARY SECTOR: 1.Activites undertaken by directly using natural resources. 2. Example—Agriculture, Mining, Fishing, Forestry, Dairy etc. 3.It is called primary sector because it forms the base for all other products that we subsequently make. 4. Since most of the natural products we get are from agriculture, dairy, forestry, fishing it is also called Agriculture and related sector. SECONDARY SECTOR:

It covers activities in which natural products are changed into other forms through ways of manufacturing that we associate with industrial activity. 2. 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. 3. 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. TERTIARY SECTOR:

1.These are the activities that help in the development of the primary & secondary sector. 2. These activities by themselves do not produce good but they are an aid and support to the production process. 3.Example: a)Transportation--Goods that are produced in the primary sector need to be transported by trucks or trains and than sold in the wholesale and retail shops; b) Storage--at times it is necessary to store these products in godowns,which is also a service made available. c)Communication --talking to others on telephone);

d) Banking--borrowing money from the banks.
4.Since these activities are generate services rather than goods it is also called Service sector.

Q. How do we count the various goods and services and know the total production in each sector? As thousands of goods and services are produced, it is an enormous task to add up all these. To get to this problem economists suggested that the value of goods and services should be used rather than adding the actual numbers. But only one precaution is to be undertaken ie., only final value of the goods and services should be counted as it already includes the value of all intermediate goods. GDP— 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.

Q. Who measures the GDP in India?
This mammoth(huge) task in India is carried on by the Central government ministry , with the help of various govt. Departments of Indian states and union territories. The information relating to total volume of goods and services and their prices is collected and then estimates the GDP. Historical change in the sectors: three stages.

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 takeup many other activities which led to the increase in number of activities.  -However at this...
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