Sectors of Indian Economy

Class 10 Economics

When we produce a good by exploiting natural resources, it is an activity of the primary sector. Since most of the natural products we get are from agriculture, dairy, fishing, forestry, this sector is also called agriculture and related sector.

The secondary sector covers activities in which natural products are changed into other forms through ways of manufacturing that we associate with industrial activity. It is the next step after primary. Since this sector gradually became associated with the different kinds of industries that came up, it is also called as industrial sector.

After primary and secondary, there is a third category of activities that falls under tertiary sector and is different from the above two. These are activities that help in the development of the primary and secondary sectors. Transport, storage, communication, banking, trade are some examples of tertiary activities. Since these activities generate services rather than goods, the tertiary sector is also called the service sector.

Comparing Three Sectors

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. The sum of production in the three sectors gives the Gross Domestic Product (GDP) of a country.

It is the value of all final goods and services produced within a country during a particular year. GDP shows how big the economy is.

Historical Change in Sectors

Generally, it has been noted from the histories of many, now developed, countries that at initial stages of development, primary sector was the most important sector of economic activity.

As the methods of farming changed and agriculture sector began to prosper, it produced much more food than before. Many people could now take up other activities. There were increasing number of craft-persons and traders. Buying and selling activities increased many times.

Besides, there were also transporters, administrators, army etc. However, at this stage, most of the goods produced were natural products from the primary sector and most people were also employed in this sector.

Over a long time (more than hundred years), and especially because new methods of manufacturing were introduced, factories came up and started expanding. Those people who had earlier worked on farms now began to work in factories in large numbers. People began to use many more goods that were produced in factories at cheap rates. Secondary sector gradually became the most important in total production and employment. Hence, over time, a shift had taken place. This means that the importance of the sectors had changed.

In the past 100 years, there has been a further shift from secondary to tertiary sector in developed countries. The service sector has become the most important in terms of total production. Most of the working people are also employed in the service sector. This is the general pattern observed in developed countries.

Organised and Unorganised Sectors

Organised sector covers those enterprises or places of work where the terms of employment are regular and therefore, people have assured work. 

The unorganised sector is characterised by small and scattered units which are largely outside the control of the government.

Public and Private Sectors

Another way of classifying economic activities into sectors could be on the basis of who owns assets and is responsible for the delivery of services.

In the public sector, the government owns most of the assets and provides all the services. The purpose of the public sector is not just to earn profits. Governments raise money through taxes and other ways to meet expenses on the services rendered by it.

In the private sector, ownership of assets and delivery of services is in the hands of private individuals or companies. Activities in the private sector are guided by the motive to earn profits. To get such services we have to pay money to these individuals and companies.

Railways or post office is an example of the public sector whereas companies like Tata Iron and Steel Company Limited (TISCO) or Reliance Industries Limited (RIL) are privately owned.