Basic Concepts in Economics Part II

     Basic Concepts in Economics Part II

 The Sectors of the Economy

The economic activities of an economy is

classified mainly into three primary sector

economic activities (agriculture and allied), secondary sector (manufacturing, construction etc) and service sector or

tertiary sector activities (transport and

communication etc).The Ministry of

Statistics and Programme Implementation

(MOSP), Government of India has been

publishing National Accounts Statistics

annually classifying the Indian economy

into three sectors and re-classifying the

sectors into various sub sectors. In this

classification primary sector includes

agriculture, forestry and logging and

fishing. The secondary sector includes

manufacturing (registered and un-registered manufacturing), construction,

electricity, gas and water supply. Tertiary

sector or service sector includes transport, storage and communication, railway, trade, hotels and restaurants, banking and insurance, real estate, ownership of dwellings and business services, public administration and other services. In Indian economy the contribution of primary sector is less than 20 per cent and the agriculture share in national GDP is reducing even though 58 per cent of India’s labour force still engaged in agriculture and allied activities. This is a serious issue in the rural life of India. The agrarian sector has been facing serious crisis and to a greater extent it is structural and institutional. The area under irrigation has been almost constant for the last several years, declining capital expenditure by the public sector in agriculture, lack of infrastructural facilities, declining institutional credit to agriculture etc all these are burning issues of India’s farm sector. Sharp decline of agriculture in

value-added terms to GDP, increasing

amenities in urban India and not much in

rural India where more than 70 per cent

of the population lives etc are some

disturbing facts to those who hold ‘Indian

Economic Miracle’ theory. We have good

demographic advantage, vast agricultural

land and in this land we can cultivate all

most all crops sufficiently to meet the

requirements of our growing population.

But now the present situations of India

like poor state of our education, public health, agriculture and rural economy,

poor amenities in rural areas and urban

slums, poor public delivery systems, high

poverty ratio, still high illiteracy rate,

malnutrition and high infant mortality rate

are burning issues to be addressed urgently. At the national level the contribution of manufacturing sector is around 18 per cent and it is almost constant for the last so many years. But in Kerala it is around 10 per cent and in Kerala we have a stagnant manufacturing sector. The contribution of service sector to the national economy is nearly 60 per cent. There are serious disparities in the growth rates of agriculture, manufacturing and service sectors of the Indian economy.