Sectoral trends in National Income of India

Sectoral trends in National Income of India

In 1950-51, the share of the primary sec­tor in GDP was as high as 55.8%, while that of the secondary sector was only 15.2%. There has been a steady decline in the share of primary sector since then. It fell to 26% in 2000-01. On the other hand, over the entire plan period, as the industrial sector expanded, its contribution to GDP had been in­creasing and it rose to 22% in 2000-01.

Along with the growth of the secondary sector, the terti­ary sector has also registered a higher growth dur­ing the last 50 years of planning. In 2000-01 its contribution was 52%.

The share of the tertiary sector (com­prising mainly the service sector) improved much, from 29% in 1950-51 to 52% in 2000-01. -The increase in contribution has been shared equally by the sub-sectors like transport, communication, trade, finance and real estate, community and per­sonal services.

The changing structure of national income, therefore, indicates industrialisation, though at a slow pace. Furthermore, one also notices struc­tural changes within the industrial sector. During the plan period, India’s industrial structure tilted heavily in favour of capital goods industries.

This, of course, is a sign of industrialisation. But since then, industrial structure has become heavily bi­ased in favour of consumer goods industries. It is the organised manufacturing and mining indus­tries that have fared well as compared with unor­ganised small enterprises. Yet, unregistered small and tiny sectors occupy a dominant position in the Indian economy as necessary supports to these industries are given by the Government.

The tertiary sector is not a homogeneous cat­egory. It indicates trade, transport and communi­cations, banking and insurance, real estate and dwellings, public administration, community and personal services. The combined share of these heterogeneous activities rose from 29% in 1950- 51 at 1993-94 prices to 52% in 2000-01. As a re­sult of a better growth recorded in the tertiary sec­tor one sees a significant change—a “change from a subsistence to a market-oriented economy”.

This is an indication of modernisation of the economy. Modernisation is marked by the increasing use of industrial inputs (like chemicals, machinery, elec­trical and transport equipment) for agricultural sector, particularly after the Green Revolution in agriculture in the late 1960s. Thus, it is clear that all the sectors in an economy do not grow uni­formly; some grow at a higher rate than others.

Another aspect of India’s national income growth is the contribution of the public sector in GDR. The contribution of the public sector in GDP rose from 10.7% in 1960-61 to 20.8% in 1981-82 and to 28.6% in 1993-94. But it fell to 22.1% in 1999-00 mainly due to privatisation of several pub­lic sector units.

Services sector is the largest sector of India. Gross Value Added (GVA) at current prices for Services sector is estimated at 92.26 lakh crore INR in 2018-19. Services sector accounts for 54.40% of total India’s GVA of 169.61 lakh crore Indian rupees. With GVA of Rs. 50.43 lakh crore, Industry sector contributes 29.73%. While, Agriculture and allied sector shares 15.87%.  At 2011-12 prices, composition of Agriculture & allied, Industry, and Services sector are 14.39%, 31.46%, and 54.15%, respectively.  Share of primary (comprising agriculture, forestry, fishing and mining & quarrying), secondary (comprising manufacturing, electricity, gas, water supply & other utility services, and construction) and tertiary (services) sectors have been estimated as 18.57 per cent, 27.03 per cent and 54.40 per cent.

Indian GDP composition in 2017 are as follows : Agriculture (15.4%), Industry (23%) and Services (61.5%). With production of agriculture activity of $375.61 billion, India is 2nd larger producer of agriculture product. India accounts for 7.39 percent of total global agricultural output. India is way behind china which has $991 bn GDP in agriculture sector. GDP of Industry sector is $560.97 billion and world rank is 6. In Services sector, India world rank is 8 and GDP is $1500 billion.

Contribution of Agriculture sector in Indian economy is much higher than world’s average (6.4%). Contribution of Industry and Services sector is lower than world’s average 30% for Industry sector and 63% for Services sector.  At previous methedology, composition of Agriculture & allied, Industry, and Services sector was 51.81%, 14.16%, and 33.25%, respectively at current prices in 1950-51. Share of Agriculture & allied sector has declined at 18.20% in 2013-14. Share of Services sector has improved to 57.03%. Share of Industry sector has also increased to 24.77%.

On the basis of these national income trends and structural changes, we can conclude that the Indian economy can no longer be described as a typical under-developed country. Definitely, some developments have taken place.

Nevertheless, black spots are there. Growth is still inadequate and much of its increase is eaten away by the grow­ing mouths, despite some favourable structural changes. It is hoped that by the turn of the cen­tury sectoral composition of India’s national in­come will move further in favour of secondary and tertiary sectors.

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