Read this complete and easy-to-understand notes on sectors of the Indian economy including primary, secondary, and tertiary sectors. Learn about each sector’s key characteristics, challenges, and opportunities and understand their role in driving India’s economic growth.
Different Sectors of the Indian Economy
India’s economy is categorized into three main sectors: primary, secondary, and tertiary.
Primary Sector
- The primary sector includes agriculture, forestry, fishing, and mining.
- It plays a crucial role in the economy, providing employment to a significant portion of the population and contributing to India’s GDP.
Secondary Sector
- The secondary sector comprises industries that manufacture and process raw materials.
- This includes industries such as textile, automobile, steel, and electronics.
- The secondary sector is a major contributor to the country’s GDP and has experienced significant growth in recent years.
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Tertiary Sector
- The tertiary sector, also known as the service sector, includes industries that provide services to the population.
- This sector includes IT services, banking, finance, healthcare, education, and hospitality, among others.
- The tertiary sector is the largest contributor to India’s GDP and is expected to continue its growth in the coming years.
3 Sectors of the Indian Economy in a Nut Shell
| Sector | Description | Examples |
|---|---|---|
| Primary Sector | Involves extracting or harvesting natural resources from the environment | Agriculture, mining, fishing, forestry |
| Secondary Sector | Involves processing raw materials into finished goods | Manufacturing, construction, energy production |
| Tertiary Sector | Involves providing services to consumers and businesses | Retail, healthcare, education, finance, tourism |
To understand India’s economy better, we need to know about its three main parts: the primary, secondary, and tertiary sectors. Let’s explore them further!
Primary Sector
What is the Primary Sector
- The primary sector of the economy involves the extraction and production of raw materials, such as farming, mining, and forestry.
- It includes any industry that extracts or harvests natural resources, such as agriculture, fishing, and mining.
Primary Sector Examples
Examples of industries in the primary sector include:
- Agriculture (farming of crops and livestock)
- Fishing
- Forestry (logging and paper production)
- Mining (extraction of coal, minerals, oil, and gas)
- Hunting and trapping
- Quarrying
- Trapping
- Ranching
- Agriculture and agribusiness
- Fishing and fish farming
- Forestry and forest products
- Mining and mineral extraction
- Oil and gas extraction
- Primary production of metals and other minerals
- Agriculture, forestry, fishing, and hunting
- Extractive industries (such as mining, oil, and gas extraction)
Primary Sector of the Indian Economy
- In India, the primary sector of the economy includes industries such as agriculture, forestry, fishing, and mining. Agriculture is a major contributor to the primary sector in India and employs a large portion of the country’s population.
- India is one of the world’s largest producers of rice, wheat, sugarcane, and cotton. The country is also a major producer of fruits, vegetables, and spices.
- Fishing and aquaculture are also significant industries in India, with a large coastal population depending on the fishing industry for their livelihoods.
- The mining sector in India includes the extraction of coal, iron ore, bauxite, and other minerals. The primary sector in India is a major contributor to the country’s GDP and employs a large portion of the population.
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Which Economic Activities Come Under the Primary Sector
Economic activities that come under the primary sector include:
- Agriculture (cultivation of crops and livestock)
- Fishing
- Forestry (logging and paper production)
- Mining (extraction of coal, minerals, oil, and gas)
- Hunting and trapping
- Quarrying
- Trapping
- Ranching
- Agriculture and agribusiness
- Fishing and fish farming
- Forestry and forest products
- Mining and mineral extraction
- Oil and gas extraction
- Primary production of metals and other minerals
- Agriculture, forestry, fishing, and hunting
- Extractive industries (such as mining, oil, and gas extraction)
These activities all involve the extraction or harvesting of natural resources and typically involve a significant amount of manual labour or the use of heavy machinery. They are considered primary because they are the first stage of production and typically require the least amount of processing.
Why Fishing is a Primary Sector Activity
- Fishing is considered a primary sector activity because it involves the direct extraction of natural resources from the environment.
- Fishermen catch fish, shellfish, and other sea creatures using a variety of methods such as nets, traps, lines, and diving.
- The primary sector includes industries that extract or harvest raw materials from the natural environment, without significant processing.
- Fishing falls under this category because it involves the direct extraction of fish and other sea creatures from the ocean or other bodies of water, which are then sold as raw products or processed for further use.
The Primary Sector does not include
The primary sector does not include industries that involve significant processing or manufacturing of raw materials. These are typically considered to be part of the secondary sector, or industrial sector. This includes industries such as:
- Manufacturing (production of finished goods)
- Construction
- Energy production (electricity generation, oil refining, etc.)
- Transportation and warehousing
- Wholesale and retail trade
- Water supply and waste management
- Waste collection, treatment, and disposal
- Remediation and other environmental protection activities
- Recycling
These industries typically involve the use of raw materials, but they also involve significant amounts of processing, manufacturing, and other forms of value-added activities that are not present in primary sector activities.
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What Elements are Involved in the Primary Sector
The primary sector typically involves the following elements:
- Natural resources: This includes raw materials such as land, water, minerals, and other resources that are extracted or harvested in the primary sector.
- Labor: The primary sector typically involves manual labour or the use of heavy machinery to extract or harvest natural resources. This can include activities such as farming, logging, and mining.
- Machinery and equipment: Heavy equipment and machinery are often used in primary sector activities such as mining and logging.
- Technology: Advanced technology such as precision farming equipment, GPS-enabled fishing boats, and earth-moving equipment is increasingly being used in primary sector activities to improve efficiency and productivity.
- Environmental impact: Primary sector activities can have a significant impact on the environment, including deforestation, soil erosion, and water pollution.
- Economic impact: The primary sector is a major contributor to a country’s GDP, and it provides employment for a large portion of the population in many developing countries.
- Socio-Economic Impact: The primary sector activities have a direct impact on the livelihoods of people working in the sector and those who depend on it.
Primary Sector Activities
▪ Primary sector activities are those that involve the direct extraction or harvesting of natural resources. These activities include:
- Agriculture: Cultivation of crops and livestock, including farming, ranching, and agribusiness.
- Fishing: Catching fish, shellfish, and other sea creatures using methods such as nets, traps, lines, and diving.
- Forestry: Logging and paper production, including the cutting and harvesting of trees for timber and paper.
- Mining: Extraction of coal, minerals, oil, and gas, including quarrying and drilling.
- Hunting and trapping: Hunting wild animals for food or other purposes, and trapping animals for fur or other products.
- Ranching: Raising of animals for meat, milk, wool, and other products.
- Agriculture and agribusiness
- Fishing and fish farming
- Forestry and forest products
- Mining and mineral extraction
- Oil and gas extraction
- Primary production of metals and other minerals
- Agriculture, forestry, fishing, and hunting
- Extractive industries (such as mining, oil, and gas extraction)
These activities all involve the direct extraction or harvesting of natural resources, often with the use of manual labour or heavy machinery. They are considered primary because they are the first stage of production and typically require the least amount of processing.
Secondary Sector
What is the Secondary Sector?
▪ The secondary sector, also known as the industrial sector, includes industries that manufacture and process raw materials into finished goods. This includes activities such as manufacturing, construction, and energy production.
▪ The secondary sector takes the raw materials produced by the primary sector and transforms them into finished products through various manufacturing and processing techniques.
▪ The industries that fall under the secondary sector are typically more technologically advanced and require a higher level of skill and education than those in the primary sector.
▪ Secondary sector industries are responsible for creating jobs, generating income and wealth, and contributing to the economic growth of a country.
Examples of Secondary Sector
▪ Examples of industries in the secondary (or manufacturing) sector include:
- Automobile manufacturing
- Textile production
- Steel production
- Construction
- Pharmaceuticals
- Food processing
- Electronics manufacturing
- Chemical manufacturing
- Machinery production
- Energy production (e.g. oil refineries, power plants)
Economic Activity Included in the Secondary Sector
▪ The secondary sector, also known as the industrial sector, includes economic activities that involve the transformation of raw materials into finished goods. This includes manufacturing, construction, and energy production.
▪ The secondary sector is also referred to as the “goods-producing” sector, as it produces tangible products. It includes a wide range of industries such as agriculture, mining, construction, manufacturing, power generation, and other heavy industries, and can also include the assembly of goods and provision of services that are closely linked to the production of goods.
Secondary Sector of the Indian Economy
▪ The secondary sector of the Indian economy is a significant contributor to the country’s gross domestic product (GDP) and employs a significant portion of the country’s workforce.
▪ It includes a wide range of industries such as agriculture, mining, construction, manufacturing, power generation, and other heavy industries, and can also include the assembly of goods and provision of services that are closely linked to the production of goods.
▪ The manufacturing sector is the largest component of the secondary sector and includes industries such as textiles, chemicals, pharmaceuticals, automobiles, and engineering goods. The construction sector is another important component, with a focus on infrastructure development, housing, and real estate. The power and energy sector, including oil and gas, is also an important contributor to the secondary sector.
▪ In recent years, the Indian government has made efforts to promote the growth of the secondary sector by implementing policies such as Make in India, Digital India, and Skill India to attract investment and improve the ease of doing business in the country. However, the sector still faces challenges such as a lack of access to finance, poor infrastructure, and rigid labour laws.
Activities of the Secondary Sector
▪ The activities of the secondary sector include:
▪ Manufacturing: The process of converting raw materials into finished goods through the use of machinery, tools, and labour. This includes industries such as textiles, chemicals, pharmaceuticals, automobiles, and engineering goods.
▪ Construction: The process of building, developing, and maintaining infrastructure, buildings, and other physical structures. This includes activities such as architectural design, engineering, and project management.
▪ Energy production: The process of producing and distributing electricity, oil, and natural gas. This includes activities such as oil and gas exploration, power generation, and distribution.
▪ Mining: The process of extracting natural resources such as coal, minerals, and metals from the earth. This includes activities such as drilling, blasting, and excavation.
▪ Agriculture: The process of cultivating crops, raising livestock, and producing other agricultural products. This includes activities such as planting, harvesting, and processing of food products.
▪ Assembly of goods: The process of putting together different components to produce a finished product. This includes activities such as assembling automobiles, electronics, and other consumer goods.
▪ Provision of services that are closely linked to the production of goods: This includes activities such as logistics, transportation, and warehousing.
Difference between Primary and Secondary Sector
| Primary Sector | Secondary Sector |
|---|---|
| Involves the extraction and production of raw materials | Involves the processing and manufacturing of goods |
| Examples: farming, mining, fishing | Examples: construction, manufacturing, power generation |
| Often involves manual labor and natural resources | Often involves machinery and technology |
| Often considered the “first stage” of economic activity | Often considered the “second stage” of economic activity |
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Occupation Related to the Secondary Sector
▪ Some examples of occupations related to the secondary sector include:
- Factory worker
- Machinist
- Welder
- Electrician
- Assembly line worker
- Industrial Engineer
- Quality control inspector
- Maintenance Technician
- Construction worker
- Carpenter
- Plumber
- Heavy equipment operator
- Material handler
- Design Engineer
- Industrial Designer
- Supply Chain Manager
- Production Manager
- Logistics Coordinator
▪ These are some examples, but there are many other jobs that can be related to the secondary sector as well.
Tertiary Sector
What is the Tertiary Sector?
- The tertiary sector refers to the provision of services.
- These are industries that provide a service to customers, rather than producing a physical product.
- The tertiary sector is often considered the “third stage” of economic activity, following the primary and secondary sectors.
Examples of Tertiary Sector
Some examples of industries in the tertiary sector include:
- Healthcare
- Education
- Retail
- Finance
- Banking
- Insurance
- Real estate
- Professional services (such as law, consulting, and accounting)
- Transportation and logistics
- Hospitality and tourism
- Communications
- Entertainment
- Government
- Non-profit organizations
In this sector, the occupations are often based on knowledge, expertise and customer interactions rather than physical labour. Some examples of jobs in the tertiary sector include:
- Healthcare professionals such as doctors, nurses, and therapists
- Teachers and professors
- Retail salespeople and customer service representatives
- Bankers and financial analysts
- Real estate agents and brokers
- Lawyers and consultants
- Transportation and logistics professionals
- Hotel and restaurant staff
- Media and communications professionals
- Government officials and bureaucrats
- Non-profit managers
It is important to note that the distinction between sectors is not always clear-cut, and some industries may have elements of both the secondary and tertiary sectors.
Why is the Tertiary Sector Called the Service Sector?
- The tertiary sector is also called the service sector or the service industry.
- This name reflects the fact that this sector is primarily focused on providing services, rather than producing goods.
- The service sector encompasses a wide range of industries, including healthcare, education, finance, retail, and many others.
- The service industry is a very important part of modern economies, as it is often the largest employer and the source of many new jobs.
Detailed Examples of Tertiary Sector
The tertiary sector is characterized by its focus on providing services, rather than producing goods. Some examples of industries within the tertiary sector include:
- Healthcare: hospitals, clinics, nursing homes, and other medical facilities
- Education: primary and secondary schools, colleges and universities, and vocational schools
- Retail: department stores, grocery stores, and other retail outlets
- Finance: banks, credit unions, investment firms, and insurance companies
- Banking: commercial banks, investment banks, the central bank
- Real estate: property management companies, real estate agents, and brokers
- Professional Services: accounting, law, consulting, and other business services
- Transportation: airlines, trucking companies, and public transit systems
- Hospitality: hotels, motels, resorts, and other travel and tourism-related businesses
- Communications: television, radio, and print media, internet service providers
- Entertainment: movie theatres, concert venues, and other places of entertainment
- Government: federal, state, and local government agencies
- Non-Profit Organizations: charities, foundations, and other non-profit groups
Importance of Tertiary Sector in India
- The tertiary sector is an important part of the Indian economy, as it has been growing rapidly in recent years. Here are a few reasons why the tertiary sector is important for India:
- Job creation: The tertiary sector is the largest employer in India, providing jobs to a large number of people, especially in urban areas.
- Economic growth: The growth of the tertiary sector has been a major contributor to India’s economic growth. The sector has been growing at a faster rate than the primary and secondary sectors, and it is a key driver of GDP growth.
- Foreign exchange: The tertiary sector, particularly the services sector, has been a significant contributor to India’s foreign exchange earnings. The country has a large pool of skilled and semi-skilled workers in areas such as IT, BPO, KPO, and other service sectors which are in high demand globally.
- Urbanization: The tertiary sector is concentrated in urban areas, which has led to increased urbanization in India. This has led to the development of urban infrastructure and services and has helped to improve the standard of living in cities.
- Innovation and Entrepreneurship: The tertiary sector plays a vital role in driving innovation, research and development, and entrepreneurship.
- Social development: Tertiary sector is also important for social development, as it provides access to healthcare, education, and other services that are essential for improving the well-being of individuals and communities.
Difference Between Primary, Secondary, and Tertiary Sectors of Economy
| Sectors | Primary Sector | Secondary Sector | Tertiary Sector |
|---|---|---|---|
| Services | The primary sector comprises fundamental industries that supply essential raw materials to support other industries | The secondary sector encompasses industries that utilize primary materials to create enhanced and novel materials | The tertiary sector involves industries that provide consumers with the goods produced by the secondary sector |
| Methods Used | Traditional methods, No specific organized procedure was followed. | Modern methods, An organized way of working. | Modern methods and algorithms. Organized and sophisticated logistic tools are used for the processes. |
| Examples | Fishing, Mining, Agriculture, Animal husbandry, Forestry | Manufacturing Units (small and large) | Finance, Banking, Administration, Hotel, Tourism, Trade, Insurance, Communication |
| Also referred to as | Agriculture sector or allied services sector | Manufacturing sector | Service sector |
| Employer Rate | The largest employer rates are found in this sector | A moderate number of employer rates found in this sector | The employment rates are increasing. |
Frequently Asked Questions (FAQs)
The difference between Primary, Secondary, and Tertiary Sector based on types of industries are:
• The primary sector includes basic industries like fishing, mining, and agriculture.
• The secondary sector has manufacturing industries.
• The tertiary sectors include final point industries like finance, hotel, trade, banking, and tourism.
In India, the service sector, also known as the tertiary sector, is the most significant sector. The Gross Value Added (GVA) for the services sector at current prices was estimated to be 96.54 lakh crore INR during the 2020-21 fiscal year.
Among the primary and secondary sectors, the tertiary sector is growing at the fastest rate owing to the increasing demand for essential services such as educational institutions, hospitals, postal and telegraph services, police stations, courts, transportation, and banking services, which are necessary to cater to the growing population.
To generate more employment opportunities in the secondary sector, it is essential to encourage and identify industries and services in semi-rural areas that can provide employment to a significant number of people. For example, setting up cold storage facilities, promoting the honey collection, and similar activities can be beneficial.
Industries involved in the extraction and production of raw materials, such as farming, mining, fishing, logging, and forestry, fall under the primary sector. This sector typically constitutes a more substantial portion of the economy in developing nations.
An important difference between the Primary, Secondary, and Tertiary sectors is based on the methods they utilize. These include: The primary sector uses traditional techniques and implies unorganized methods of working The secondary sector uses organized ways of working The tertiary sector is very organized and uses logistic tools for functioning.
Here are the points that highlight the difference between the Primary, Secondary, and Tertiary Sector based on their methods of working:
• The primary sector employs traditional techniques and unorganized methods of working.
• The secondary sector uses organized methods of working.
• The tertiary sector is highly organized and utilizes logistical tools to function efficiently.
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