India’s Economic Development and Key Sectors

Primary, Secondary And Tertiary Sectors provide insights into the composition and development of the country’s economy. These sectors play  a unique role in shaping the nation’s economic landscape. Understanding their status helps gauge the nation’s economic progress and the distribution of its workforce, showing the intricate relationship between sectoral dynamics and overall India’s Economic Development.

A Comparative Analysis of India’s Economic Development from 1973-74 to 2013-14

These specific years have been chosen for analysis because they offer comparable and authentic data. Figure allows us to observe the growth in total production over forty years, providing a nuanced understanding of India’s Economic Development.

 GDP by Primary, Secondary and Tertiary Sectors

Understanding the Shifts in India’s Economic Development, Sectoral Dynamics & GDP:

India’s GDP Evolution (1973 to 2013): The figure displays the percentage share of the three sectors in India’s GDP over a period of forty years, from 1973-74 to 2013-14. 

• It illustrates how the importance of these sectors has evolved during this time.
• While the share of the sectors in GDP has changed, a similar shift has not occurred in employment, revealing a unique aspect of India’s economic development.

 India’s Economic Development and Employment Trends Disconnect

• India’s Jobs and Crops: Why Agriculture Rules Employment?: Despite changes in the GDP composition, the primary sector, primarily agriculture, remains the largest employer in India. 
  • This shift between GDP composition and employment can be attributed to the fact that not enough jobs were created in the secondary and tertiary sectors.
• Growth Disparity in Industrial and Service Sectors: Industrial and service sector outputs grew significantly, but employment in these sectors did not grow proportionally. 
  • For instance, industrial production increased more than nine times, while employment in industry only tripled. 
  • In the service sector, production expanded fourteen times, but employment increased by around five times.
• Disparities in Workforce Distribution for Sustainable Growth
  • More than half of the country’s workforce remains engaged mainly in agriculture, contributing only a fraction of the GDP. 
  • In contrast, the secondary and tertiary sectors, which employ fewer people, generate the majority of the nation’s GDP.

Addressing Disguised Unemployment: A Barrier to India’s Economic Development

• Challenges of Underemployment in Agriculture: This situation highlights the issue of underemployment in the agriculture sector. Many individuals work less than their full potential because there are more people involved in agriculture than necessary.
  • Example: 
    • Consider a small farmer, whose family relies on two hectares of rain-dependent land to cultivate crops.
    • All five family members work on the plot, even though their labor efforts could be better utilized elsewhere. 
  • This situation is characterized as disguised unemployment because people appear to be working but are not fully employed.
• Diversifying Income Sources: To address this underemployment, some family members might seek employment in other sectors, such as working in a factory or on a landlord’s land. 
  • This transition increases the family’s income without affecting agricultural production.
• Underemployment Across Various Sectors: This underemployment issue is not limited to agriculture and can also occur in other sectors, such as casual workers in urban service sectors who struggle to find daily employment or street vendors who earn very little due to limited opportunities.

Boosting Employment Opportunities: Strategies for India’s Economic Development

The issue of underemployment in agriculture persists in India, and there are also people who are completely unemployed. Several strategies can be employed to increase employment opportunities,

• Irrigation Boost: Enhancing Agricultural Infrastructure:
  • Investing in irrigation facilities, such as constructing a dam and canals, can help farmers increase their agricultural output. 
  • This could generate additional employment within the agricultural sector itself.
• Transportation and Storage Facilities for Agricultural Employment Growth: 
  • Improving rural roads, transportation, and storage infrastructure can aid farmers in reaching markets and selling their produce. 
  • This can create employment not only for farmers but also for those involved in transportation and trade.

Gur Making in Haryana

• Credit Access for Enhanced Productivity and Employment:
  • Providing affordable agricultural credit to farmers can help them acquire necessary inputs like seeds, fertilizers, equipment, and pump sets.
  • Access to credit can enhance agricultural productivity and employment.
• Promoting Local Industries for Job Creation and Economic Growth:
  • Identifying, promoting, and establishing industries and services in semi-rural areas can create jobs.
  • Example:  Setting up dal mills, cold storage units, honey collection centers, or food processing industries in proximity to agricultural regions can provide employment opportunities.

• Investment in Education and Healthcare for Job Creation and Social Development: 
  • Expanding educational institutions and healthcare facilities can generate employment in the education and health sectors. 
  • For instance, recruiting more teachers, healthcare professionals, and support staff can create jobs.
• Tourism Development for Significant Job Creation in Untapped Regions: 
  • Many regions have untapped tourism potential that, with proper planning and support, can employ a significant number of people.
• Regional Craft Industry for Sustainable Employment: 
  • Supporting and revitalizing regional craft industries can provide employment opportunities, especially in areas with unique traditional crafts.

• Short-term Measures: MGNREGA 2005 for Immediate Employment Impact
  • To address immediate employment needs, India made a law implementing Right to work in about 625 districts of India.
  • It is known as  the Mahatma Gandhi MGNREGA 2005 and Immediate Employment Needs in the Context of India’s Economic Development
  • This act guarantees 100 days of employment in a year for rural residents who are willing and in need of work.
  • It focuses on labor-intensive projects that can benefit land and agricultural production.

Therefore, a multi-pronged approach is required to increase employment opportunities in India, addressing both short-term and long-term needs.

Rising Importance of the Tertiary Sector in India’s Economic Development

• Remarkable Growth in the Tertiary Sector to Dominance in India’s Economic Landscape (1973-2013): 
  • Over the forty years between 1973-74 and 2013-14, the most significant increase has occurred in the tertiary sector. 
  • Consequently, by the year 2013-14, the tertiary sector has become the largest producing sector in the country.
• India’s Diverse Service Sector Employment Landscape: 
  • The service sector in India employs a wide range of jobs, from highly skilled and educated professionals to individuals engaged in small-scale services such as small shopkeepers and repair persons. 

Several factors contribute to the rising importance of the tertiary sector in India:

• Backbone of Developing Nations’ Progress:
  • In any country, there is a need for fundamental services like healthcare, education, postal and telegraph services, law enforcement, and more.
  • Developing nations often rely on the government to provide these essential services.
• Interconnected Growth of Agriculture, Industry, and Service Sectors:
  • As agriculture and industry develop, there is an increased demand for services such as transportation, trade, and storage. 
  • The growth of the primary and secondary sectors drives the demand for these services.
• Service Sector Surge with Rising Incomes: With increasing income levels, people start seeking additional services like dining out, tourism, shopping, private healthcare, and private schools. This trend is especially noticeable in urban areas and major cities.
• Information and Communication Technology:  Boom in ICT-Based Services: In recent years, services based on information and communication technology have become essential and have experienced rapid growth. India’s Economic Development is evident in this transformative journey.

However, it’s important to note that not all segments of the service sector are growing equally. While some segments are thriving, others struggle to provide a livelihood, often due to limited alternative employment opportunities. Hence, only a part of this sector is growing in importance.