Sectors of Economy

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7 April 2016

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The three-sector theory is an economictheory which divides economies into three sectors of activity: extraction of raw materials (primary), manufacturing (secondary), and services (tertiary). It was developed by Colin Clark and Jean Fourastié. According to the theory, the main focus of aneconomy’s activity shifts from the primary, through the secondary and finally to the tertiary sector. Fourastié saw the process as essentially positive, and in The Great Hope of the Twentieth Century he writes of the increase inquality of life, social security, blossoming of education and culture, higher level of qualifications, humanisation of work, and avoidance ofunemployment. Countries with a low per capita income are in an early state of development; the main part of their national income is achieved through production in the primary sector. Countries in a more advanced state of development, with a medium national income, generate their income mostly in the secondary sector. In highly developed countries with a high income, the tertiary sector dominates the total output of the economy.

The Primary sector of the economy is the change of natural resources into primary products. Most products from this sector provides raw materials for other industries. The share of primary sector has decreased from the past four decades. In 1970 the share of the sector was 50% which has reduced to 29% in 1995 and is now further reduced to 25%. Major businesses in this sector are agriculture, agribusiness, fishing,forestry, all mining and quarrying industries.

Agriculture in India is the major sector of its economy. Almost two-thirds of the total work-force earns their livelihood though farming and other allied sectors like forestry, logging and fishing which account 18% of the GDP. These sectors provide employment to 60% of the country’s total population. About 43% of the country’s total geographical area is used for agricultural purposes. After independence additional areas were brought under cultivation and new methods, practices and techniques of irrigation and farming were introduced by the government. The “Green Revolution” and “Operation Flood” in the country have made India self sufficient in producing food grains and milk. Among other things, the government also tried to decrease the dependence on monsoons. Better seeds, use of fertilizer, education of farmers and provision of agricultural credit and subsidies are reasons for increase in agricultural

Fish breeding has increased almost five times since India got independence and is a prime industry in coastal regions.The economic zone of India runs up to Indian ocean (370 Km) covering an area more than 2 million square kilometers. Approximately 4.5 million ton catches are expected from that area. India has about 14000 Km2 brackish water for aquaculture, out of which 600 Km2 were being farmed in early 1990s; about 16,000 Km2 of freshwater lakes, ponds and swamps; and nearly 64,000 kilometers of rivers and streams. Mining

Mining is the term used for the extraction of useful material from the treatment of ore, vein or coal seam. Materials obtained from extraction may be base metals, precious metals, iron, uranium, coal, diamonds, limestone, oil shale, rock salt and potash. Any material obtained from agriculture or cultured in laboratory requires to be mined.



India’s industrial sector accounts for 27.6% of the GDP and gives employment to 17% of the total workforce. Though agriculture is the foremost occupation of the majority of the people, the government had always laid stress on the industrial development of the country. Thus policies and strategies were framed to give a boost to India’s industry. The government aims at achieving self-sufficiency in production and protection from foreign competition. Since independence, India is marching ahead to become a diverse industrial base.

Today India holds some key industries in the sectors like steel, engineering and machine tools, electronics, petrochemicals, textiles and software. Importance has also been give to improve the infrastructure of the country. The government has liberalized its industrial policy thereby attracting huge foreign direct investment. If on one hand several multinational companies opened their offices in India, on the other hand many Indian companies

The process of building or assembling of infrastructure is known as a term commonly used in architecture and civil engineering- “construction”. Construction job is all about multitasking and needs the services from project manager, construction manager, design engineer, construction engineer and project architect.

The tertiary sector includes service industry and it holds the highest importance among all sectors. The tertiary sector of economy involves the provision of services to business as well as final consumers. Services may involve the transport, distribution and sale of goods from producer to consumers as may happen in wholesaling and retailing, or may involve the provision of a service, such as in pest control or entertainment. The tertiary sectors account for 51% of the GDP.

Service sector
The tertiary sectors may include insurance, bankin and transport. The higher the productivity in primary and secondary sector and lower the employment in these sectors, the better it is. People need more and more services for leading qualitatively better lifestyle. They need more means of transport, more communication and educational facilities, more training, more medical facilities, entertainment, technical facilities, banking facilities and so on.

Tertiary sector depends on scientific research and innovative developments to increase productivity and it provides engineering and construction
consultancy support services for all projects in all sectors. Developed countries employ more than 80% the services sector.

India is the fifteenth largest country in the world in terms of services’ output. This sector provides employment to 23% of the workforce and is the fastest growing sector, with a growth rate of 7.5% in 1991–2000 up from 4.5% in 1951–80. It has the largest share in the GDP, accounting for 53.8% in 2005 up from 15% in 1950.

Insurance sector

The concept of insurance dates long back to 1818. Life Insurance premium accounts for 2.5% of the nation’s GDP while general insurance contributes 0.65% of India’s GDP. Government of India opened gate for private insurance companies to enter the arena and FDI of 26% in the Insurance sector in 1999 until then only LIC provided insurance faculties.

Private Insurance companies like ICICI, Max Newyork, Bajaj allianz, Kotak Mahindra, Metlife are providing life insurance, general insurance, medical insurance also.

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"Sectors of Economy" StudyScroll, 7 April 2016,

StudyScroll. (2016). Sectors of Economy [Online]. Available at: [Accessed: 9 August, 2022]

"Sectors of Economy" StudyScroll, Apr 7, 2016. Accessed Aug 9, 2022.

"Sectors of Economy" StudyScroll, Apr 7, 2016.

"Sectors of Economy" StudyScroll, 7-Apr-2016. [Online]. Available: [Accessed: 9-Aug-2022]

StudyScroll. (2016). Sectors of Economy. [Online]. Available at: [Accessed: 9-Aug-2022]

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