Sectors of Economic Activities

  • The various economic activities are grouped together called sectors.
  • There are three main sectors on the basis of economic activities. These are primary sector, secondary sector and tertiary sector.
  • When the natural resources are exploited to produce a good then we call it the activity of primary sector.
  • Primary sector is called primary because this sector provides the base for all other products that we make.
  • Primary sector is also called agriculture and related sector because agricultural activities like farming, diary, fishing, forestry etc. provides us most of the natural products.
  • Example of primary sector – cotton cultivation¬† – for which mostly we are dependent on the natural factors like temperature and rainfall and also the final product cotton is a natural product.
  • In the secondary sector, the natural products are transformed into other forms through different ways of manufacturing in a factory or workshop or home.
  • Secondary sector is related to the industries as the processing work is done there. So it is also called industrial sector.
  • Example of secondary sector – garments , sugar, bricks etc.
  • Tertiary sector does not produce any good but it helps in the production of goods in the primary and the secondary sectors.
  • Tertiary sector provides services rather than goods and therefore it is also called service sector.
  • Examples of tertirary sector – transport, banking, storage, teachers, cobblers etc.
  • There are traditional as well as modern examples of the service sector. The traditional services includes teachers, doctors, cobblers, washerman etc. whereas the modern examples includes the services like ATM booths, call centres, internet cafe, etc.
  • All the econmic activities are highly interdependent. For example, for agriculture we are dependent on chemical fertilizers, pesticides, tractors, threshers etc. which comes under the secondary sector. And also for the supply of agricultural products we take the help of transport which is under the tertiary sector.

Comparing the Three Sectors

  • There are two important parameters used to know that which sector is dominant in the country. These are GDP contribution and employment generation by the sector.
  • In India, tertiary sector is the dominant sector in terms of GDP contribution and primary sector is dominant in terms of employment generation.
  • The goods and services finally reach to the consumers are called final goods and services. For example: biscuit, cloth, toothpaste etc.
  • The goods and services used in making the final goods and services are termed as intermediate goods and services. For example: flour, sugar, milk, additives are used in making biscuit, so these products are called intermediate goods and services.
  • GDP can be defined as the total value of all the final goods and services produced by the three different sectors in a country in a financial year.
  • GDP is a complex task. It is undertaken by the Central Government ministry after collecting all the data from the different states and the union territories.

Historical Change in Sectors

  • In the beginning, primary sector was the dominant sector in all the countries of the world as we all started with food gathering, hunting and agriculture. During this period, most of the goods that were produced were the natural products.
  • Due to industrialisation, the factories were set up and production began expanding in the secondary sector. People also started shifting from the primary sector to the secondary sector. Hence, during this time secondary sector became the most dominant sector.
  • Due to the development in technology and various kinds of services that were coming up provided job opportunities to the people and attracted the people. This resulted in the shift from secondary sector to tertiary sector. Hence, the service sector became the most dominant sector.
  • But the historical shift in sectors in India does not follow this pattern of primary sector to the secondary sector and then to the tertiary sector as happened in most of the developed countries at present.
  • The historical shift in sectors in India witnessed shift from the primary sector to the tertiary sector. It means that in India, earlier the primary sector was dominant and not it is the tertiary sector.

Primary, Secondary and Tertiary Sectors in India

  • Data collected in the year 1973 show that, primary sector was the most dominant sector followed by tertiary and then secondary sector in terms of GDP. But in the year 2003, that is, over thirty years, tertiary sector became the most dominant sector followed by the primary sector and then the secondary sector.
  • In the year 1973, primary sector was the most dominant sector in terms of employment generation followed by the tertiary sector and then the secondary sector. Even by the year 2000, no shift had taken place. The primary sector is even today the most dominant sector in terms of employment generation in India.
  • Due to the following reasons, the tertiary sector is rising in importance in India:
  1. a) Rise in the basic services provided by the government.
  2. b) The development in the primary and secondary sectors has led to the development of the tertiary sector.
  3. c) Due to the rise in income, people have started spending on the various kinds of services.
  4. d) Due to the development of new kinds of services like IT sector services.
  • The service sector includes two different kinds of people. One who is highly educated, skilled and earning very high such as doctors, engineers, software professionals etc. and on the other hand those who are not educated and unskilled such as street vendors, repair persons etc.
  • Though the service sector has grown over the past few decades but not all of the service sector has grown equally. The educated and highly skilled workers have grown very high whereas the uneducated and the unskilled are still struggling.

Where are Most of the People Employed?

  • In India, even today most of the people are employed in the primary sector i.e., in the agricultural field because the other two sectors are not able to provide job opportunities.
  • There is problem of underemployment in the field of agriculture. Due to lack of job opportunities in the secondary and tertiary sectors, people are bound to be engaged in the primary sector.
  • Features of disguised unemployment:
  1. a) Extra people are working on the fields. They are not required to work.
  2. b) All are working. No one sits idle.
  3. c) They share the labour effect.
  4. d) They work less than their potential.
  5. e) There is hidden unemployment.
  • Underemployment is not just a feature of the primary sector. It can also be seen in the service sector, such as people doing odd jobs like painters, plumbers etc.

How to Create More Employment?

  • The secondary and the tertiary sectors are not providing much job opportunities. Therefore, people are bound to work in the primary sector. In order to release the burden of people from the primary sector, there is need to create some job opportunities in different sectors.
  • Job opportunities can be created in the different sectors through the following ways:
  1. i) Government should spend some money for the construction of wells and canals.
  2. ii) Government should invest in transportation and storage.

iii) Government should provide loan to the people for cultivation at reasonable rate of interest.

  1. iv) Opportunities for new industries should be identified, located and promoted in the villages and small towns.
  2. v) Opening of the services like the cold storages for the farmers.
  3. vi) Honey collection centres can be started in the forested areas.

vii) Jobs can be created in the field of education, health and tourism sector.

viii) Jobs can be created by launching the various government schemes such as the Mahatma Gandhi National Rural Employment Guarantee Act, etc.

  • Mahatma Gandhi National Rural Employment Guarantee Act:
  1. i) This Act was passed in the year 2005.
  2. ii) According to this Act, 100 days of guaranteed employment is provided to all those who are able to work and are in need of work in the rural areas.

iii) Unemployment allowance is provided to the workers if the government is not able to provide them work within 15 days.

  1. iv) This Act helps in providing income and livelihood to the people in the rural areas.

Division of Sectors as Organised and Unorganised

  • On the basis of the working condition, there are two different sectors – organised and unorganised.
  • Features of organised sector:
  1. i) These are the big units.
  2. ii) These units are registered with the government.

iii) They follow the rules and regulations followed by the government.

  1. iv) There are some formal processes and procedures in this sector. Therefore, it is called organised.
  2. v) There is security of employment.
  3. vi) There is fixed working hours and workers are paid for overtime.

vii) There are some other benefits like paid holidays, medical facilities, safe working environment, Provident Fund, etc.

  • Features of unorganised sector:
  1. i) These are the small and scattered units.
  2. ii) These units are not registered with the government.

iii) They do not follow the rules and regulations followed by the government.

  1. iv) There are no formal processes and procedures in this sector. Therefore, it is called unorganised.
  2. v) There is no security of employment.
  3. vi) There is no fixed working hours and workers are not paid for overtime.

vii) There are no benefits like paid holidays, medical facilities, safe working environment, provident fund etc.

How to Protect the Workers in the Unorganised Sectors

  • The workers in the unorgansised sectors are exploited in various ways. They are paid low, there is no job security, there are no other benefits etc.
  • The workers in the rural areas in unorganised sector includes landless farmers, artisans etc. who need to be supported in terms of loan, inputs, storage etc.
  • The workers in the urban areas in unorganised sectors includes vendors, head load workers etc. who need to be supported for raw material and marketing.
  • The SC, ST and OBC workers in the unorganised sectors need to be supported in both the terms, economically and socially as they are discriminated.