SECTORS OF ECONOMIC ACTIVITIES
There are many activities that are undertaken by
directly using natural resources. Take, for example, the cultivation of Cotton.
It takes place within a crop season. For the growth of the Cotton plant, we
depend mainly, but not entirely, on natural factors like rainfall, sunshine and
climate. The product of this activity, Cotton, is a natural product.
Primary
sector - Since most of the
natural products we get are from agriculture, dairy, fishing, forestry, this sector
is also called agriculture and related primary sector.
Secondary sector covers activities in which natural products are
changed into other forms through manufacturing that we associate with
industrial activity. The product is not produced by nature but has to be made
and therefore some process of manufacturing is essential. This could be in a
factory, a workshop or at home. For example, using cotton fibre from the plant,
we spin yarn and weave cloth. Since this sector gradually became associated
with the different kinds of industries that came up, it is also called as industrial
sector.
Tertiary Sector - These are activities that help in the
development of the primary and secondary sectors. These activities, by
themselves, do not produce a good but they are an aid or a support for the
production process. For example, goods that are produced in the primary or
secondary sector would need to be transported by trucks or trains and then sold
in wholesale and retail shops. At times, it may be necessary to store these in
godowns. We also may need to talk to others over telephone or send letters
(communication) or borrow money from banks (banking) to help production and
trade. Transport storage communication banking, trade are some examples of
tertiary activities Since activities generate services rather than goods the
tertiary sector is also called the service sector. Service sector also includes
some essential services that may not directly help in the production of goods.
For example, we require teachers, doctors, and those who provide personal
services such as washermen, barbers, cobblers, lawyers, and people to do
administrative and accounting works. In recent times, certain new services
based on information technology such as internet cafe, ATM booths, call
centres, software companies etc have become important.
Introduction About Different Sectors
The various production activities in the
primary, secondary and tertiary sectors produce a very large number of goods
and services. Also, the three sectors have a large number of people working in
them to produce these goods and services. The next step, therefore, is to see
how much goods and services are produced and how many people work in each
sector. In an economy there could be one or more sectors which are dominant in
terms of total production and employment, while other sectors are relatively
small in size. How do we count the various goods and services and know the
total production in each sector? With so many thousands of goods and services
produced, you might think this is an impossible task! To get around this
problem, economists suggest that the values of goods and services should be
used rather than adding up the actual numbers. For example, if 10,000 kgs of
wheat is sold at Rs 8 per kg, the value of wheat will be Rs 80,000. The value
of 5000 coconuts at Rs 10 per piece will be Rs 50,000. Similarly, the value of
goods and services in the three sectors are calculated, and then added up.
Not every good (or service) that is produced and
sold needs to be counted. It makes sense only to include the final goods and
services. Take, for instance, a farmer who sells wheat to a flour mill for Rs 8
per kg. The mill grinds the wheat and sells the flour to a biscuit company for
Rs 10 per kg.
PRIMARY, SECONDARY AND TERTIARY SECTORS IN INDIA
Rising Importance of the Tertiary Sector in
Production Over the thirty years between 1973 and 2003, while production in all
the three sectors has increased, it has increased the most in the tertiary
sector. As a result, in the year 2003, the tertiary sector has emerged as the
largest producing sector in India replacing the primary sector. Why is the
tertiary sector becoming so important in India? There could be several reasons.
First, in any country several services such as hospitals, educational
institutions, post and telegraph services, police stations, courts, village
administrative offices, municipal corporations, defence, transport, banks,
insurance companies, etc. Are required. These can be considered as basic
services. In a developing country the government has to take responsibility for
the provision of these services. Second, the development of agriculture and
industry leads to the development of services such as transport, trade, storage
and the like, as we have already seen. Greater the development of the primary
and secondary sectors, more would be the demand for such services. Third, as
income levels rise, certain sections of people start demanding many more
services like eating out, tourism, shopping, private hospitals, private
schools, professional training etc. You can see this change quite sharply in
cities, especially in big cities. Fourth, over the past decade or so, certain
new services such as those based on information and communication technology
have become important and essential. Theproduction of these services has been
rising rapidly.
ORGANISED AND UNORGANISED SECTORS
Let us examine another way of classifying
activities in the economy. This looks at the way people are employed. What are
their conditions of work? Are there any rules and regulations that are followed
as regards their employment Kanta works in the organised sector. Organised
sector covers those enterprises or
places of work where the terms of employment are regular and therefore, people
have assured work. They are registered by the government and have to follow its
rules and regulations which are given in various laws such as the Factories
Act, Minimum Wages Act, Payment of Gratuity Act, Shops and Establishments Act
etc. It is called organised because it has some formal processes and
procedures. Some of these people may not be mployed by anyone but may work on
their own but they too have to register themselves with the government and follow the rules and
regulations. Workers in the organised sector enjoy security of employment. They
are expected to work only a fixed number of hours. If they work more, they have
to be paid overtime by the employer They also get several other benefits from
the employers. What are these benefits? They get paid leave, payment during
holidays, provident fund, gratuity etc. They are supposed to get medical
benefits and, under the laws, the factory manager facilities like drinking
water and a safe working environment. When they retire, these
workers get pensions as well. In contrast, Kamal
works in the unorganised sector. The unorgariised sector is characterised by
small and scattered units which are largely outside the control of the
government. There are rules and regulations but these are not followed. Jobs
here are lowpaid and often not regular. There is no provision of overtime, paid
leave, holidays,
leave due to sickness etc. Employment is not
secure. People can be asked to leave without any reason. When there is less
work, such as during some seasons, some people may be asked to leave. A lot
also depends on the whims of the employer. This sector includes a large number
of people who are employed on their own doing small jobs such as selling on the
street or doing repair work. Similarly, farmers work on their own and hire
labourers as and when they require.
SECTORS ON THE BASIS OF OWNERSHIP: PUBLIC AND PRIVATE
SECTORS
Another way of classifying economic activities
into sectors could be on the basis of who owns assets and is responsible for
the delivery of services. In the public sector, the government owns most of the
assets and provides all the services. In the private sector, ownership of
assets and delivery of services is in the hands of private individuals or
companies. Railways or post office is an example of the public sector whereas
companies like Tata Iron and Steel Company Limited (TISCO) or Reliance
Industries Limited (RIL) are privately owned. Activities in the private sector
are guided by the motive to earn profits. To get such services we have to pay
money to these
individuals and companies. The purpose of the
public sector is not just to earn profits. Governments raise money through
taxes and other ways to meet expenses on the services rendered by it. Modern
day governments spend on a whole range of activities. What are these
activities? Why do governments spend on such activities? Let’s find out. There
are several things needed by the society as a whole but which the private
sector will not provide at a reasonable cost. Why? Some of these need spending
large sums of money, which is beyond the capacity
of the private sector. Also, collecting money
from thousands of people who use these facilities is not easy. Even if they do
provide these things they would charge a high rate for their use. Examples are construction of roads, bridges,
railways, harbours, generating electricity, providing irrigation through dams
etc. Thus, governments have to undertake such heavy spending and ensure that
these facilities are available for everyone. There are some activities, which
the government has to support. The private sector may not continue their
production or business unless government encourages it. For example, selling
electricity at the cost of generation may push up the costs of production of
industries. Many units, especially small-scale units, might have to shut down. Government here steps in
by producing and supplying electricity at rates
which these industries can afford. Government
has to bear part of the cost. Similarly, the government in India buys wheat and
rice from farmers at a ‘fair price’. This it stores in its god owns and sells
at a lower price to consumers through ration shops. The government has to bear
some of the cost. In this way, the government supports both farmers and
consumers. There are a large number of activities which are the primary
responsibility of the government. The government must spend on these. Providing
health and education facilities for all is one example. Running proper schools
and providing quality education, particularly elementary education, is the duty
of the government. India’s size of illiterate population is one of the largest
in the world.
Similarly, we know that nearly half of India’s
children are malnourished and a quarter of them are critically ill. The infant
mortality rate of Orissa (87) or Madhya Pradesh
(85) is higher than that of the poorest regions of the world such as the African
countries. Government also needs to pay attention to aspects of human development
such as availability of safe drinking water, housing facilities for the poor and
food and nutrition, It is also the duty of the government to take care of the
poorest and most ignored regions of the country through increased spending in
such areas.