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. Similarly,
in the case of an activity like dairy, we are dependent on the biological
process of the animals and availability of fodder etc. The product here,
milk, also is a natural product. Similarly, minerals and ores are also natural
products. When we100 produce a
good by exploiting natural resources, it is an activity of the primary
sector. This is because it forms120
the base for all other products that we subsequently make. Since most of
the natural products we get are from agriculture, dairy, fishing, forestry,
this sector is also called agriculture and related sector.
The
secondary sector covers activities in which natural products are changed
into other forms through ways of manufacturing that we associate with
industrial activity. It is the next step after primary. The
product is not produced by nature but has to be made and therefore some
process200 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. Using
sugarcane as a raw material, we make sugar or jaggery. We convert earth into
bricks and use bricks to make houses and buildings. Since this sector
gradually became associated with the different kinds of industries that came
up, it is also called as industrial sector. After primary and
secondary, there is a third category of activities that falls under tertiary
sector and is different from the above two. These are300 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 and360
retail shops. At times, it may be necessary to store these in
godowns. We may also need to talk to others over telephone or send letters or
borrow money from banks to help production and trade. Transport, storage,
communication, banking, 400 and
trade are some examples of tertiary activities. Since these 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,480
ATM booths, call centres, software companies etc. have become important.
The
various production activities in the primary, secondary500 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 so600 many
thousands of goods and services produced, you might think this is an impossible
task! Not only would the task be enormous, you might also wonder
how we can add up cars and computers and nails and furniture. It would not
make sense! You are right in thinking so. 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 kilograms of wheat is sold at Rs
20 per kilogram, the value of wheat will be Rs 2,00,000. The value of700 5000 coconuts at Rs 15 per coconut will
be Rs 75,000. Similarly, the value of goods and720
services in the three sectors are calculated, and then added up. Remember,
there is one precaution one has to take. 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 20 per kilogram. The mill grinds the wheat and
sells the flour to a biscuit company for Rs 25 per800 kilogram. The biscuit company uses the
flour and things such as sugar and oil to make four packets of biscuits. It
sells biscuits in the market to the consumers for Rs 80. Biscuits are the final
goods that reach the840
consumers. Why are only ‘final goods and services’ counted? In contrast to
final goods, goods such as wheat and the wheat flour in this example are intermediate
goods. Intermediate goods are used up in producing final goods and services.
The value of final goods already includes the value of all the intermediate
goods that are used in making the final900
goods. Hence, the value of Rs 80 for the biscuits already includes the value of
flour. Similarly, the value of all other intermediate goods would have been
included. To count the value of the flour and wheat separately is therefore not
correct because then we would be counting the value of the same things a
number of times. The value960
of final goods and services produced in each sector during a particular year
provides the total production of the sector for that year and the sum of
production in the three sectors is called the Gross Domestic Product of
a1000 country. It is the
value of all final goods and services produced within a country during a
particular year. GDP shows how big the economy is. In India, the mammoth task
of measuring GDP is undertaken by a Central Government ministry. This
Ministry, with the help of various Government departments of all the Indian States
and Union Territories, collects information relating to total volume of
goods and services and their prices and then estimates the1080 GDP.
Generally,
it has been noted from the histories of many developed countries that at
initial stages of development, 1100
primary sector was the most important sector of economic activity. As
the methods of farming changed and agriculture sector began to prosper, it
produced much more food than before. Many people could now take up other
activities. There were increasing number of craft persons and traders.
Buying and selling activities increased many times. Besides, there were also
transporters, administrators, army etc. However, at this stage,
most of the goods produced were natural products from the primary sector and
most people were also employed in this sector.1186
