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Sectors of Indian Economy : All You Need to Know

Sectors of Indian Economy

Friends, everyday we find so many economic activities happening around us. From cultivation to production to providing services, every minute we are surrounded by such activities. But have you ever thought of understanding them? Are these sectors different? or Are they inter-related or dependent? How do they affect each other? Today, in this blog we we’ll learn about the Sectors of Indian Economy in detail.

Sectors of Indian Economy

An economy includes all activities related to consumption, production, trade of goods and services in an area. It applies to everyone from individuals to entities such as corporations and governments. The economy of a country is governed by its culture, laws, history, and geography, among other factors, and it evolves due to necessities of people or nation. Because of this reason, no two economies are the same.

The economic activities can be grouped on the basis of certain important criterion. These groups are referred as sectors.

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Different Sectors of Indian Economy

I. Sectors of Indian Economy : Based on Nature of Activity

1. Primary Sector: When the goods are produced by exploiting natural resources, it comes under the activity of the primary sector. It involves transforming natural resources into primary products. It forms the base for all other products that we eventually make. Most of the natural products we get are from agriculture, dairy, fishing, forestry. Therefore, this sector is also called as Agriculture and Related Sector.

Examples of the Primary Sector:

  • Agriculture
  • Fishing
  • Mining
  • Forestry, etc.

Generally, it is the larger sector in the developing countries. In developed countries, activities of the primary sector have become more technologically advanced, for example, the mechanization of farming instead of hand picking and planting.

2. Secondary Sector: The secondary sector encompasses activities in which natural products are changed into other forms, or finished goods by manufacturing that are consequently used for consumption. The product has to be made and therefore some process of manufacturing is essential. The manufacturing could be done in a factory, workshop or at home.

For example, using cotton fiber from the plant, to spin yarn and weave cloth, or using sugarcane to make jaggery and refined sugar. The manufacturing process is usually associated with the different kinds of industries that come up, therefore, this is also called as Industrial Sector.

Secondary Sector is usually divided into Light Industry and Heavy Industry.

  • Light Industry: it involves products that require less capital and is more consumer-oriented.

Examples: Manufacturing of clothes, Shoes, furniture, etc.

  • Heavy Industry: it involves products that are either heavy in weight or in their production process. They require huge capital and advanced resources or facilities.

Examples: Heavy machinery, Chemical Plant, Production of heavy equipments, like crane, etc.

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3. Tertiary Sector: The activities in tertiary sector helps in the development of the primary and secondary sectors. These activities do not produce any good but they are an aid or a support for the production process.

For example, Certain business activities involve borrowing money from banks to help production and trade or goods that are produced in the primary or secondary sector would need transportation facility to be sold in wholesale or retail shops. 

Examples of Tertiary Sector:

  • Transport
  • Storage
  • Communication
  • Banking
  • Insurance
  • Trade
  • Hospitality
  • Tourism
  • Entertainment
  • Management Consultancy

Since the activities involved in Tertiary Sector generate services rather than goods, it is also called as Service Sector.

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II. Sectors of Indian Economy : Based on Condition of Work

1. Organized sector:

It involves those enterprises or places of work where the people are offered some amount of job security. The employees are expected to work only a fixed number of hours. In case they work more, they are to be paid overtime by the employer. They also get several other benefits from the employers, for instance, medical benefits, provident funds, paid-leaves, etc. The enterprises are registered by the government and have to follow its rules and regulations under the provision of various laws such as the Factories Act, Minimum Wages Act, Payment of Gratuity Act, etc.

Examples: Hospitals, Schools, etc. where employees are offered regular job and the organisation is governed by various laws and regulations.

2. Unorganized Sector:

Section 2 (l) of the Unorganized Workers Social Security Act, 2008 defines an unorganized sector as:

“an enterprise owned by individuals or self employed and engaged in the production or sale of goods or providing service of any kind whatsoever, and where the enterprise employs workers, the number of such workers is less that ten.”

The unorganized sector is characterized by small and fragmented units which are mostly outside the control of the government. The rules and regulations are, generally, not followed. The Jobs are often not regular and are low-paid. There is no provision for overtime, paid leave, holidays, leave due to sickness, etc. The employees do not have any job security. They can be asked to leave /quit without any reason. Mostly it depends on the whims of the employer. For eg. The employer may ask the people to quit the job when there is less work.

Examples: Large number of people who are employed on their own doing small jobs such as selling on the street or doing repair work, farmers work on their own and hire labourers as and when they require, etc.

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III. Sectors of Indian Economy : Based on Ownership of Assets

1.Private Sector: Here, the ownership of assets and delivery of services is in the hands of private individuals or companies. For example, Reliance Industries Limited (RIL), Aditya Birla Group, etc.

2.Public Sector: In this sector, the government owns most of the assets and provides all the services. For example, Railways, Post-Offices, etc.

Note: Currently, tertiary/service sector is the backbone of the Indian economy, contributing the most in Indian GDP. It accounts for 53.66% of total India’s GVA of 137.51 lakh crore Indian rupees. Industry sector contributes 29.02%. While, Agriculture and allied sector shares 17.32% and GVA is around of 23.82 lakh crore INR.

Source: Sector-wise contribution of GDP of India

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Sectors of Indian Economy : Sample Questions:

Q1. Banking comes under which of the following sectors?

  1. Primary
  2. Secondary
  3. Tertiary
  4. Both Primary and Secondary
  5. Both Secondary and Tertiary

Answer: 3

Q2. The sectors are classified into private and public sector on the basis of:

  1. The nature of economic activity
  2. Employment conditions
  3. Job security
  4. Ownership of enterprises

Answer: 4

This is all from us in this blog. Hope you find the information useful. You must keep visiting this page for more Study blogs, Practice Questions, Free E-books, etc related to Banking Awareness.

All the best!

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