Indian Economy And Various Sectors of the Economy

In the first five decades of the twentieth century, till we got our independence in 1947, the per capital GDP in India was stagnant. The trend growth in GDP during this period was 0.9% with population growing by about 0.8%.

The average growth rate of the Indian economy over period of 25 years since 1980-81 was about 6.0% - a significant improvement over the annual growth rate of the earlier three decades.

Various Sectors of the Economy

1.       Agriculture

2.       Industry

3.       Micro and Small Enterprises (MSEs)

4.       Services

Agriculture

Agriculture is one of the most important sectors of Indian economy. Agriculture (including allied activities) accounted for 17% of the GDP in 2008-09 as compared to 21.7% in 2003-04. The prosperity of the rural economy is also closely linked to agriculture and allied activities. Indian agriculture is heavily dependent on monsoons. It play a critical role in determining whether the harvest will be rich, average or poor.

Industry

Industry accounts for 19% of the GDP in 2008-09. About one-third of the industrial labor force is engaged in simple household manufacturing only.

Central Statistical Organization (CSO) classifies the industrial sectors into three segments-

a)      Mining and Quarrying

b)      Manufacturing and Electricity

c)       Gas and Water supply

Micro and Small Enterprises (MSEs)

Inclusion of MSE in priority sector with sub limit for the micro unit. Stipulation that collateral should not be taken for loan up to Rs. 5 lakh to MSE units. Providing credit guarantee for collateral free loans from the Credit Guarantee Trust Fund administered by SIDBI.

Micro, Small And Medium Enterprises Development (MSMED) Act, 2006 classifies enterprises broadly into two categories –

a)      Manufacturing enterprises

b)      Service enterprises

Services

The Service sector accounts for about two-third of India’s GDP i.e 64% in 2008-09. In the developed economies, the industrial and service sectors contribute a major share in GDP while agriculture accounts for a relatively lower share.

Structural Change in Indian Economy

Structural Changes in GDP (Growth Rate in %)
	1900-1950	1951-80	1980s	1990s	2000-09
Agriculture & allied activities	NA	2.1	4.4	3.2	2.8
Industry	NA	5.4	6.4	5.7	6.5
Service	NA	4.5	6.3	7.1	9.0
GDP	0.7	3.5	5.6	5.7	7.2

Structural Changes in GDP (Share in GDP) New series (Base : 1990-2000)
	1950-51	1960-61	1970-71	1980-81	1990-91	2008-09
Agriculture & allied activities	55	51	44	38	31	17
Industry	11	13	15	17	20	19
Service	34	36	41	45	49	64