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Three Sectors of Indian Economy

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Indian economy is one of the fast-growing economies of the world and can be broadly divided into the sectors of primary, secondary, and tertiary activities. And tertiary activities are further divided into Quaternary and quinary activities.

Sectors of the Indian Economy

The Indian economy is divided into the following categories:

  1. Primary Sector
  2. Secondary Sector
  3. Tertiary Sector

Primary Sector 

The Primary area in India is the area that is to a great extent dependent on the accessibility of normal assets to make the products and furthermore to execute different cycles. The administrations in this area are altogether dependent on the accessibility of the normal assets to keep everyday activities running.

Different models in this area incorporate fishing and ranger service, however, agribusiness represents the biggest in this area. One of the serious issues that this area faces is underemployment and hidden work. Underemployment represents the specialists not working to the best of their capacities while the last option represents the laborers not working to their actual potential.

Agriculture along with fisheries and forestry add to about one-third of India’s GDP and is the most important contributor and acts as the backbone of the economy. The Indian agricultural sector has remarkable changes due to the initiative of government programs to a great extent.



Secondary Sector

The secondary sector is subjected to natural ingredients which are then utilized to produce the services or products that are offered to consumers. The most important aspect of this sector is transportation and assembling. Around 14 percent of the labor force of the nation is working in these areas. Around 28 percent of the GDP is contributed by the area.

This sector is important and best in adding value to the products and services. The sector transforms the primary sector output into finished products that can be sold or exported.



Tertiary Sector

The tertiary sector refers to the sector which does both production and also exchange. The tertiary sector is also referred to as the service sector and creates services rather than finished goods. The service industry includes significant services which indirectly contribute to the creation and distribution of commodities.

This area is the biggest contributor to the GDP of the country and as much as about 59% of the GDP is contributed by this area. 



Quaternary Sector

This sector deals with specialized tertiary activities, in terms of the knowledge sector and whose demand and consumption have been increasing tremendously. Quaternary activities can be outsourced and are not tied to any specific resources or necessarily by localized markets. Better ideas about the manufacturing processes and improvement in the quality of services help in the growth of the economy.

Quinary Sector

They focus on the creation, re-arrangement, and also interpretation of new ideas and also existing ones, as the use of new technologies and data interpretation. “Gold collar” professionals, representing the highest paid skills like government officials, research scientists, etc. The highest level of decision-makers and policymakers comes from this sector.

Comparing the Three Sectors

In the process of production, it is often best to consider the final goods and services. That’s because the value of the final good already includes the value of all the intermediate goods, which had been used up to make the final goods. The value of the final goods, as well as services produced in each sector in a year, provides the total production of the sector in that particular year. And the sum of production in three sectors gives up the Gross Domestic Product; which is assessed by the Central government ministry.

Historical Change in Sectors

In the initial stages of development. the primary sector is the most important sector for economic activities. As the methods of farming improved and more could be produced by the agricultural sector, different other jobs came up and people became inclined to work as traders or craftspersons. However, at this stage, most goods produced were natural goods, and the primary sector was also mostly employed here.

Over course of many years and with new methods of manufacturing introduced, factories came up and started expanding more. The secondary sector gradually grew and became the most important in total production and employment. Other the years, there has been a further shift from the secondary to the tertiary sector in developed countries. The service sector has turned out to be the most important and most working people are employed in this sector.

Sectorwise Contribution to Indian Economy

The contribution of the primary sector in India stands at 21.8 percent, of secondary is 24.29 percent and the tertiary sector is the highest at 53.89% of the total. The contribution of the agricultural sector to the Indian economy is higher than the world average and that of industries is lower than the world average.

GDP of the three sectors


Rising Importance of the Tertiary Sector

The tertiary sector became the largest producing sector in India from 2013-14. This was mainly because of the following reasons:

  • Hospitals and schools are the most important services for people. These can be considered basic services and in the case of developing countries, the government has the responsibility for provision.
  • The development of agriculture and industries leads to an increase in services like transport, trade, storage, etc.
  • As there is a rise in income level, people demand more services like dining out, tourism, shopping, and so forth.
  • Also, certain new services such as IT and communication have become important and essential and these services have been rising rapidly.

However, the balance in the service sector is still not here. On one side, there are limited services that employ the highly skilled ones and another end a large number of workers are engaged like small shopkeepers, transport persons, etc. and they live on a bare minimum, yet perform this as no alternatives are available and hence the only part of the sector is growing in importance.

Where are most of the people employed?

Even though industrial output or production of goods rose by nine times but employment in the industry rose up by three times only. Same for tertiary, the production rose by 14 times but employment by only five times. Because of this more than half of the workers in the country are working in the primary sector, producing only one-sixth of the GDP. In contrast, secondary and tertiary sectors produce the rest of the product where they employ less than half of the people.

This implies there are more people in agriculture than required, because of which people and workers are underemployed. Underemployment refers to the situation where people are working but all of them are made to work very less than potential. This kind of underemployment is hidden and not visible, hence it is also called disguised unemployment.

How to create more employment?

One of the ways the government can help is by spending some money or banks can provide a loan to the needy and small-scale producers. Another way is by identifying, promoting, and locating industries and services in semi-rural areas in which a large number of people may be employed.

By focusing more on the education of people, the government can generate a lot more employment opportunities in the field of education, medicine, and other important job positions. The GDP of the country can be boosted by increasing income and employment for people in the areas of tourism, and new services like IT, and some of this would be helped by the government.

Right to Work has been implemented by the Government of India in about 625 districts of India and is called Mahatma Gandhi National Rural Employment Guarantee Act 2005, for those who are capable to work and need work, work in rural areas with a guarantee of 100 days.

Organized and Unorganised Sector

The organized sector refers to the sector in which employment is fixed and regular and the employees are assured of work and job security. It is the sector, which is registered by the government and certain acts are applied to the enterprises and provides security of employment.

The unorganized sector refers to the home-based worker or self-employed worker or wage worker. They are tiny, dispersed units that operate mostly outside the official jurisdiction. This sector is marked by low incomes, unstable and irregular employment, and lack of protection either by legislation or by trade unions.

How to protect workers in the Unorganised Sector?

As the organized sector is not expanding at a rapid speed, a large number of workers are forced to enter the unorganized sector jobs, which pay low salaries. These jobs are not secure and hence have no other benefits. Hence, besides the need for more jobs, there is a need for protection and support of the workers as well in the unorganized sector.

The landless agricultural laborers, the small and marginal farmers, sharecroppers, and artisans, constitute almost 80 percent of rural households. These farmers need to be supported and given incentives by the government in the form of seeds, credit, and so forth.

In urban areas, the unorganized sectors comprise the small-scale industry, casual workers, trade, and transport and need the protection of the government as well. Workers are majorly from scheduled castes, tribes, and backward communities in the unorganized sector and are paid irregular and low salaries and face discrimination as well. Protection and support are hence important in the unorganized sector for economic and social development.

Sectors in terms of Ownership

Public Sector

In the public sector, the government owns most of the assets and also provides services. The main purpose of the public sector is not just to earn profits but also for the government to raise money through taxes and other ways to meet expenses on services rendered and a good example of the same is railways or post offices.

Private Sector

The ownership of the assets and also delivery of the services are in the hands of private individuals and also companies. Activities in the private sector are guided by the motive of profit mostly. A few examples are Tata Iron and Steel Company Limited, etc.

Major Performing Sectors in India

The three areas examined above are the most high-performing areas in India. Thus, it ought to be noted what these areas offer as far as unmistakable quality in 2022. The accompanying focuses are profoundly significant for the impending common administration’s test:

The greater part of the number of inhabitants in India relies upon the farming area for food. This has constrained editing examples to underline cash harvests like elastic and sugarcane. Because of this determined push inside the farming area, trade for horticulture merchandise has expanded. The business area has developed emphatically from iron and steel to car ventures. There is an unmistakable area of independence regarding creation and circulation, which makes venture models and private open doors more possible. The administration area has maybe been the most dependable area for open positions and business, with IT corporate goliaths like WIPRO, Infosys, and TCS gaining worldwide appreciation. The area is noteworthy for its commitment to the general GDP in the nation and its infiltrating capacities in banking and protection.

FAQs on Three Sectors of Indian Economy

Question 1:  How do 3 sectors of the economy link together?


Primary, secondary and tertiary are three sectors of the economy; which deals with extraction of raw materials, manufacturing and service industries exist for facilitation of transport, distribution and sale of the goods and services.

Question 2: Why are three sectors of the economy important?


They help the investors and the economists to understand the various areas and levels of economic activities in the economy.

Question 3: Which sector contributes most to India’s Economy?


The service sector contribute most to the India’s Economy.

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Last Updated : 24 Feb, 2023
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