Sectors of the Indian Economy

People are engaged in various economic activities. Some of these activities are producing goods. Some others are producing services. Generally, the economic activities performed are divided into various groups called sectors.  

Sectors of the Indian Economy

Primary Sector

• All the economic activities undertaken by using or exploiting natural resources directly are grouped into the primary sector
• It forms the bottom for all other products that we subsequently make 
• It is also called agriculture and related sectors since most natural products are obtained from agriculture, dairy, fishing, forestry 

Secondary Sector

• It includes activities in which natural products are converted into other forms or finished items through manufacturing
• Since this area continuously became related to the various types of ventures, it is additionally called the modern area
• For example, making clothes from cotton fibre or making sugar or jaggery (gur) from sugarcane 

Tertiary Sector

• It includes activities that are the basis of the development of the primary and secondary sectors

Activities of the tertiary sector do not involve production, but they are an aid or support for the production process. For example, providing transport facilities to move goods from factories to shops and so on.

• The sector is also called the Service sector as they provide services rather than the production of goods

Comparing the three Sectors

Primary, secondary and tertiary sectors involve different production activities that produce many goods and services. Also, a large number of people work in these sectors. Therefore, it is important to see how many goods & services are produced and how many people work in each industry. 

While measuring the total production

• The monetary value of the final goods and services is considered to make the estimates
• The value of final goods includes the value of all the intermediate goods used to make the final good
• For example, the value of wheat used is already accounted for in the final cost
• The value of final goods and services produced in each sector during a particular year provides the total production estimated by the GDP
• GDP is the value of all final goods and services produced within a country during a specific year

Historical change in the sectors

• At the initial stages of development, the primary sector has been the most important sector of economic activity
• Most of the population was involved in working in this sector
• With the change in farming methods, the agriculture sector began to prosper
• Moreover, with new manufacturing methods, factories were set up, and people shifted to the Industrial Sector
• People from farms now started working in factories in large numbers, and this sector now assumed importance
• In the past 100 years, a further shift from the secondary industry to the service sector has taken place
• Today in terms of production and employment, the service sector plays a vital role in most developed economies

Primary, Secondary and Tertiary Sectors in India

The graph below represents the production of goods and services in all three sectors. It is clear from the graph that the tertiary sector’s production has significantly risen compared to the primary and the secondary sector.

Rising Importance of the Tertiary Sector in Production:

The sector has emerged as the largest producing sector in India, replacing the primary sector due to the following reasons: 

• Development of support services such as transport, trade, storage
• Increased demands for more services such as eating out, tourism etc. with rising income levels
• The government provides basic services like schools, hospitals, police