Sectors of Indian Economy: Everything You Need to Know


From the UPSC point of view, an in-depth understanding of the Indian economy is crucial for your performance in the examination. Since a majority of issues affecting our country involves an economic perspective, it is important to have knowledge of the various sectors of Indian Economy.

In this article, we will cover the various sectors of the Indian economy, along with their current scenario and its future growth potential.

The Sectors of Indian Economy

India is predicted to be the second largest economy in the owrld by the year 2050. The three major sectors of the indian economy are as follows:-

1. Primary Sector

The primary sector is concerned with agriculture in india. Agriculture sector contributes around 16% of the Indian GDP.

2. Secondary Sector

The primary sector is concerned with industry in india. Industrial sector contributes around 31% of the Indian GDP.

3. Tertiary Sector

The primary sector is concerned with service in india. Service sector accounts for 53.66% of total India’s GVA of Rs. 137.51 lakh crore.

In view of Operations, our economy can be categorized into the following:-

  • organized
  • unorganized

In view of Ownership, our economy can be categorized into the following:-

  • Public sector
  • Private sector

The Primary Sector

Let us understand the primary sector of the Indian economy in detail :-

  • The primary sector is concerned and majorly dependant on the natural resources and its availability for the purpose of goods manufactured and execution of different processes.
  • To keep the everyday operations of this sector running, it is inevitable to have the required natural resources available for use.
  • Every year, its  contribution is on the decline. It currently contributes  17% of Indian GDP at current prices. This sector provides employment to around 53% of the Indian population.
  • The best example of the primary sector in India is agriculture, which accounts for the largest share. Besides agriculture, other activities that depend on natural resources availability including forestry, mining, fishing, quarrying, etc. fall under this sector.

In terms of setbacks, the primary sector majorly faces the issues of Underemployment and Disguised Employment.

  • Underemployment can be defined as a state wherein there are not enough workers employed.
  • Disguised Employment can be defined as a state wherein the skills of the employed workers aren’t being utilized to their maximum potential.

To resolve these problems, the following two steps can be taken by the national government and the state government:-

  • By increasing the allocated funds for better irrigation facilities
  • By increasing the provisions for loans provided to buy fertilizers and high-quality seeds

The Secondary Sector

Let us understand the secondary sector of the Indian economy in detail :-

  • The secondary sector in India is responsible for the creation of the finished usable product. This sector depends predominantly on the primary sector for the procurement of raw materials for use in the process of product creation.
  • It contributes an estimated 29 % of the Indian GDP (at current prices). The Indian government has always placed high weightage on industrial development.
  • The natural raw materials available are used to create goods and services for the purpose of consumption. The various government policies and strategies are framed to boost industries in the economy with the objective of achieving self-sufficiency in production. Self-sufficiency in production is essential as it guards the economy from foreign competition.
  • Steel, petrochemicals, engineering and machine tools, textiles are few of the major industries in India today. The liberalization of the industrial policy has helped India attract more Foreign Direct Investment. While there are many multinational companies with offices in India, there are also multiple Indian companies that have established themselves on foreign land.
  • Transportation, manufacturing and construction are the major flourishing industries under the secondary sector. The secondary sector can easily be attributed as the backbone of the economy.

The Tertiary Sector

Let us understand the tertiary sector of the Indian economy in detail :-

  • The largest contribution to India’s GDP (53%) comes from the tertiary sector.
  • Tertiary sector is interchangeably called the service industry as it provides services to the all the existing businesses and the final consumers.
  • Examples of services can vary from distribution, transport, and good’s sale from the producers to consumers, as well as retailing, wholesaling, and even services like information technology, insurance, banking, transport, entertainment, etc.
  • Higher productivity in the first two sectors greatly benefit the tertiary sector. This sector is crucial since people require appropriate services to lead a comfortable and qualitative lifestyle.
  • There is always the need for increased medical facilities, transport facilities, banking facilities, technical facilities, communication facilities, and so on.
  • Productivity in the tertiary sector leans heavily on innovative developments and scientific research.
  • In developed economies, more than 80% of their population is employed in the service sector.
  • The boom in the IT sector is due to the massive availability of high-skilled english-speaking professionals who can be employed at a low cost.

Indian Economic Scenario and Growth Potential

The industrial economy in India is garnering much speed as a result of better and higher outputs from 8 of its core industries. These industries include: –

  1. Crude Oil
  2. Steel
  3. Natural Gas
  4. Coal
  5. Refining
  6. Fertilisers
  7. Cement
  8. Electricity

Listed below are the top economic developments in India:

  • There has been considerable increase in the number of domestic companies that have entered multiple Private Equity (Pe) deals.
  • Commercial Papers (Cp) have helped Indian companies considerably in raising significant amounts.
  • The FII holdings in India stands at an estimated value of  US$ 279 billion.
  • In the period from 2000-2014, FDI equity inflow’s cumulative amount were close to US$ 300 billion.
  • According toreport by the research and advisory firm Gartner, every year, the government of India is increasing its expenditure on information technology by 7%
  • General Electric’s Chakan plant in Maharashtra is a strong indication of economic development in India. The abundant skill pool and low manufacturing costs aided GE in taking this major step.
  • According to a Confederation of Indian Industry (CII) report (‘The SMAC Code-Embracing New Technologies for Future Business’), the revenue from the business process outsourcing or BPO industry in India is estimated to cross US$ 225 billion by 2020.
  • There is an expected growth in the public cloud services market  by 37.5%
  • The increasing interest in costume jewelry has helped costume jewelry manufacturers attain an estimated growth of 20-30% in the previous years.
  • According to the The Life Insurance Council (LIC), which is the industry body of life insurers in the country, a compound annual growth rate (CAGR) of 12–15 % the next five years can be expected.
  • As per the Ministry of MSME’s annual report for FY 2012–13, there was a 19% increase in registered MSMEs in the FY 2011-2012.
  • The agricultural gross domestic product (GDP) is expected to increase by over 5% in India.
  • There was an increase of 135% in the wealth per adult of Indian economy. At an average annual rate of 8%, it has increased from US$2000 in 2000 to US$4700 in 2013.
  • Gold bars and coins were domestically processed and fabricated which added an approximate value of US$17.6 billion to the domestic economy in 2012

To conclude, we can say that amongst the sectors of Indian economy, the tertiary sector is the strongest due to its highest contribution to the nation’s GDP. Irrespective of this, the falling percentage of allied and agriculture sectors in the nation’s GDP is a matter of significant concern for the government. While the primary sector provides a means of livelihood to an estimated 53% of the people, its economic contribution is on a constant decline every year.

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