Three Sectors in India
1. GDP in 1970-71 & 2010 -11
Production in 1970-71 - Primary, Tertiary, Secondary
Production in 2010-11 - Tertiary, Secondary, Primary
In the forty years from 1970 to 2010, while production has increased in all the three sectors, it has increased the most in tertiary sector
Reasons for tertiary sector becoming important:
- In any country, services such as hospitals, educational institutions, post & telegraph services, police stations, courts, village administrative offices, muncipal corporations, defence, transport, banks, insurance companies etc - these are basic services
- Development in agriculture & industry leads to development of services such as transport, trade, storage
- As income levels of people rise, there is a demand for services such as eating out, tourism, shopping, private hospitals, private schools, professional training etc
- In the past couple of decades, new services such as information & communication technology have become important and is growing rapidly
Note: Service sector employs different types of people - skilled and educated workers at one end and large number of workers employed as small shopkeepers, repair persons, transport persons etc - who hardly earn a living but they don't have alternative work
2. Share of three sectors in GDP & Employment
Share of sectors in GDP in 1970-71 - Primary, Tertiary, Secondary
Share of sectors in GDP in 2010-11 - Tertiary, Secondary, Primary
Share of sectors in employment in 1970-71 - Primary, Tertiary, Secondary
Share of sectors in employment in 2010-11 - Primary, Tertiary, Secondary
A remarkable fact in India is that while there has been a change in the share of the three sectors in GDP, a similar shift has not taken place in employment
Primary sector continues to be the largest employer even now
This is because not enough jobs were created in the secondary & tertiary sectors
Even though industrial production went up 9 times, employment in the industry went up only 3 times
Similarly, even though production in the service sector went up 14 times, employment in the service sector went up only 5 times
Thus more than half of the workers in India work in the primary sector/agricultural sector but produce only quarter of the GDP
In contrast, secondary and tertiary sectors produce three-fourths of the produce but employ less than half of the people
3. Underemployment in Agriculture
There are more people working in agricultural sector than necessary
Even if less people work, production will not be affected
Workers in the agricultural sector are under-employed
Eg: Laxmi's story. Five people are working, none remains idle, they are apparently working but work less than their potential
Underemployment is hidden in contrast to someone who does not have a job and is clearly visible as unemployed. Hence it is also called disguised unemployment
In Laxmi's story, if two people start working in the industry the earnings of the family increases but they would continue to produce
4. Underemployment in Sec. & Ter. Sectors
Thousands of casual workers in the service sector in urban areas search for daily employment
Eg: Painters, plumbers, repair persons and people who do odd jobs
A street vendor may work the whole day but earn very little
They take up these jobs as they do not have better opportunities