Sectors Of Indian Economy

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Textbook

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1. Karnataka Text Book Class IX - Chapter 2 Sectors Of Indian Economy ಭಾರತೀಯ ಅರ್ಥವ್ಯವಸ್ಥೆಯ ವಲಯಗಳು => NCERT Text Book - Class 10th - Sectors Of The Indian Economy

Additional References

Useful websites

http://en.wikipedia.org/wiki/Tertiary_sector_of_the_economy

On insurance: http://www.kpmg.com/IN/en/IssuesAndInsights/ArticlesPublications/Documents/Insurance_industry_Road_ahead_FINAL.pdf

On communications: http://en.wikipedia.org/wiki/Communications_in_India

On health and demographics: http://en.wikipedia.org/wiki/Demographics_of_India

On agriculture: http://www.worldbank.org/en/news/feature/2012/05/17/india-agriculture-issues-priorities

Teaching Outlines

Please describe the key ideas to be conveyed in this section. Also broken down in details by each idea

Key Idea 1 - Introduction to the three Sectors of the Indian Economy

What are the key ideas to be covered

Learning objectives

To understand the chain of production To understand their relation to daily life

Notes for teachers

In earlier classes, we studied about economic activities. An economic activity is one which is performed with the objective of satisfying his wants, using available resources. This section discusses how these activities form the basis for the main sectors of an economy – primary, secondary and tertiary. The primary sector produces natural goods which are then converted to manufactured goods by the secondary sector. The tertiary sector provides various supporting services to the primary and secondary sectors.

The differences between the sectors can be explained using an example. When you buy bread from your grocery store, have you wondered how it got there? Very simply, the process is as follows: a farmer grows wheat and sells his grains in the market. A company such as Modern Bread will buy the grains and convert them into flour in its factory. The flour is then combined with various other natural products such as eggs and yeast and made into bread. Modern Bread then packs the bread and distributes them to various grocery stores. People like you and me then buy the bread for consumption.

In the above illustration, we can distinguish the three sectors. The farmer who grows the wheat is part of the primary sector because he produces natural goods that are the basis for subsequent activities (primary goods). More examples for the primary sector are fisheries, dairy and forestry. Modern Bread is part of the secondary sector because it uses the natural goods to convert them into manufactured goods. All types of industries come under this sector. The grocery store owner is providing a service by selling various manufactured goods, therefore he is part of the tertiary sector. Most services such as banking and transport come under this category. The tertiary sector also supports the other two sectors. For example, trucks are used to transport the wheat to Modern Bread's factory and again to distribute the packets of bread to various grocery stores.

Activity No 1 - Classification of various professions into the three sectors

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Identify the local professions/occupations in your place of stay for this exercise. Can include following - Textile factory supervisor, Call center worker, Rice farmer, Fisherman, Gardener, Bank manager, Coal miner, Flower cultivator, Bee-keeper, Mason, Teacher, Chemical factory worker, postwoman, police inspector

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Key Idea 2 - Primary Sector – agriculture and related sectors

What are the key ideas to be covered

Learning objectives

To understand the working of the agricultural sector in India To understand problems of the agricultural sector

Notes for teachers

Agriculture provided employment to 53.2% of India's population in 2009-10 and contributed to 17.2% of the GDP1. Of 297 million hectares of land in India, 60.5% was agricultural land (2009). Of the agricultural land, 87.8% is arable land i.e. land that can be used for growing crops. This gives a geographic sense of India's agriculture. Some other features of Indian agriculture are:

Subsistence agriculture: is farming for one's own consmuption. Farmers practice agriculture to feed their family and rarely have surplus left to sell in the market. Seasons: There are two main seasons in Indian agriculture – kharif and rabi. Kharif season lasts from April to September and rice is the season's main crop. Rabi is from October to March and wheat is the main crop. Monsoon-dependent: Indian agriculture is still largely dependent on the monsoons with only 35.2% of the total agricultural land being provided with irrigation, in 2010. Mechanization of agriculture: The Department of Agriculture and Cooperation has also initiated a National Mission on Agricultural Mechanisation to spread the benefits of mechanisation.

Green Revolution: This refers to almost a complete overhaul of agriculture in India in the '60s. It was based on using improved seeds of high yield variety, increased irrigation and increased use of chemical fertilizers. This helped India become self-sufficient in food grain production, and also allowed it to reduce its dependence on imports.

Issues faced by the Indian Agricultural Sector

Some of the problems of the Indian agricultural sector are discussed below. It is not an exhaustive list. Low productivity: Productivity per unit of land is low because of high pressure of population on agriculture, increasing fragmentation of land holdings, inadequate irrigation facilities, among other reasons. High cost of operations for farmers: Because of problems related to irrigation infrastructure, market infrastructure, and transport infrastructure, farmers' costs go up, and the problem is aggravated when they do not realize good prices for their crops. Inadequate non-farm employment: Given that the productivity of agriculture is low, farmers also suffer from a lack of non-farm employment opportunities. Poor distribution and marketing facilities: Agricultural marketing is cumbersome and costly resulting in inadequate marketing of agricultural goods.

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Key Idea 3 - Introduction to Secondary Sector

What are the key ideas to be covered

Learning objectives

To understand about the key industries of Karnataka and India To understand problems faced by India's secondary sector

Notes for teachers

As mentioned previously, the secondary sector uses natural goods produced by the primary sector and converts them into many kinds of manufactured goods. In India, manufacturing accounted for ~16% of the GDP in 2012 and 12% of employment. India's share in world manufacturing is 1.8%, compared to China's share of 13.7%. The top sub-sectors of the industrial sector in India are food products, basic metals, rubber and petrochemicals, chemicals and electrical machinery. Exhibit 3 on page 7 of this document gives a snapshot of Indian manufacturing.

National Manufacturing Policy: This is a government initiative aimed at increasing growth of the manufacturing sector in India. Its objectives are to increase the growth rate to 12-14% which will allow the sector to contribute to 25% of the GDP by 2025, increase the rate of growth of jobs to create 100 million additional jobs by 2025 and increase global competitiveness of Indian manufacturing, among others. More information about this policy can be found here.

More information about the manufacturing sector is available here.

Factors constraining the growth of Indian manufacturing: Poor core infrastructure: Poor connectivity results in high logistics costs. For ex: a truck from Gurgaon to Mumbai has to pass through 36 checkpoints and takes up to 10 days to reach its final destination. 57% of goods in India are transported by road, compared to China's 22%. Road transport is inefficient and expensive, not to mention emissions-intensive. Complex regulations: Industrialists have to work with complex regulations and procedures at central, state and local levels which deter them from investing in new ventures. For ex: a manufacturer has to comply with 70 regulations and file 100 returns a year. High cost of capital: Rising costs of inputs such as labour, fuel, power, freight and inadequate access to credit etc. are all factors that inhibit growth of manufacturing. Cumbersome land acquistion process: Multiple land acquisition policies, varied rules on how land can be acquired, compensation paid to land seller, etc. have impeded ease of executing new projects. Ex: Tata Motors' land acquisition in Singur Labour issues: Low productivity, resolving labour disputes, and working with rigid, archaic labour laws are some labour-related issues impeding manufacturing growth

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Key Idea 4 - Introduction to tertiary Sector

What are the key ideas to be covered

Learning objectives

To understand about the key services of Karnataka and India To understand problems faced by India's tertiary sector

Notes for teachers

The tertiary sector is often called the service sector of the economy. People offer their knowledge and time to improve productivity, performance, potential, and sustainability. The tertiary sector supports the other two sectors. Banking, insurance, transport, communication, health, education and training are among some of the important examples of services offered by the tertiary sector.

Banking

[link to banking under Chapter 3: Money and Credit]

Insurance

Insurance is a form of protection against risk from one party to another in exchange for payment. Insurance in India, in its current form dates back to 1818 to the Oriental Life Insurance Company in Kolkata. The Government of India nationalized the life insurance sector in 1956 and established the Life Insurance Corporation. The General Insurance Corporation for general business needs was founded in 1971. The insurance sector was opened to other players in 2000, and has thrived since then. The sector is regulated by the Insurance Regulatory and Development Authority (IRDA) under the IRDA Act of 1999. The LIC is still the country's largest insurer and has about 65% of the market share for life insurance. Some examples of non-life insurance are motor insurance, fire insurance, marine insurance, health insurance etc. In 2012, motor insurance occupied 41% of the market, followed by health insurance at 23%. This report is a good overview of the insurance sector in India.

Transport

India's transport sector contributed to 5.5% of the GDP in 2007, with road transport being the biggest contributor. Roads carry 90% of the country's passenger traffic and 65% of its freight. However, most Indian highways are congested and of poor quality. Moreover, 40% of India's villages do not have access to all-weather roads. Railways are the other form of land transport – in 2007 Indian Railways carried some 17 million passengers and 2 million tonnes of freight a day. Regarding water transport, India has 12 major ports and 187 intermediate and minor ports, and 7500 km coastiline. They help transport petroleum products, iron ore and coal among others. On air transport, India has 125 airports including 11 international aiports. Indian airports handled 96 million passengers and 1.5 million tonnes of cargo in 2006-07. This link contains some useful information about the challenges faced by the sector and some key government strategies to ease the sector.

Telecommunication

The different modes of communication include telephone, Internet, telegraphs and postal services. India's telecommunication network is the second largest in the world, based on total number of telephone users. It also has the world's third-largest Internet user base with over 137 million users as of June 2012. India's telecom sector is classified into mobile, fixed line and Internet services. The images below gives a snapshot of the key players in the market and India's National Telecom Policy, 2012. This link also gives a good background of the sector.

Health

India has a universal health care system run by the states. The Indian Constitution charges the state with 'raising the level of nutrition and the standard of living of its people and the improvement of public health' as one of its primary duties. India has a National Health Policy introduced in 1983 and amended in 2002. India's life expectancy at birth is 64 and 67 years for males and females respectively. The birth rate is 23.1 births per 1000 in 2005-10, and a death rate of 8.3 deaths per 1000, 2005-10. Its total health expenditure is 3.9% of the GDP. This page has a good profile of health in India.

This page has detailed information about health in India.

Education

In India, education is provided by the private and public sector. The total literacy rate in 2011 was 74%, 82% for males and 65% for females. Over 96% of all children between 6 and 14 years are enrolled in school in 2012. There are 1,306,992 schools in India according to the 2009 All India School Education Survey. The number of schools by management is given below: Government: 524,234 Local Body: 140,765 Private Aided: 26,484 Private Unaided: 68,203

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Project Ideas

1. Collect information about the role of each sector in the economy for India and the USA. Analyse the differences between the two. Within India, which sectors are more prominent in which locations/states?

Community Based Project

Usage

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Interview people in your village/community working in different sectors (farming, animal husbandry, factory, public sector office / government job) and ask them the challenges faced by their sector