Question
Briefly explain the following basic concepts related to NI:
Sectors of an Economy
Solution
Sectors of an Economy
For preparing estimates of national income, all producing units of an economy are classified into three industrial sectors: primary, secondary and tertiary sectors on the basis of nature and source of inputs. For example, (i) primary sector exploits natural resources, (ii) secondary sector transforms one type of commodity into other, and (iii) tertiary sector renders services.
Primary, Secondary and Tertiary Sectors
In India, a government agency, named, Central Statistical Organisation (CSO) which computes official estimates of national income and related aggregates has divided the entire economy into following three sectors. Broadly primary sector exploits natural resources; secondary sector transforms one type of commodity into other; and tertiary sector renders services as explained below.
(i) Primary sector (also called Agricultural sector). This sector includes all production units which produce goods by exploiting natural resources. These include resources like water, forests, agricultural land, coal, iron ore and other minerals, etc. Thus, this sector consists of man's primary occupations such as farming, fishing, mining, etc. This sector supplies basic raw material to secondary sector.
(ii) Secondary sector (also called Manufacturing sector). This sector includes all production units which are engaged in producing goods by transforming raw material (received from primary sector) into finished products or one type of commodity into another type of commodity. Examples are cloth mills, sugar mills, steel industry, shoe factory, biscuit factory, etc.
(iii) Tertiary sector (also called Service sector). This sector consists of producing units which are engaged in producing services. For example, banks, transport companies, insurance companies, educational and medical institutions, etc. Thus, tertiary sector provides useful services to the other two sectors.
For preparing estimates of national income, all producing units of an economy are classified into three industrial sectors: primary, secondary and tertiary sectors on the basis of nature and source of inputs. For example, (i) primary sector exploits natural resources, (ii) secondary sector transforms one type of commodity into other, and (iii) tertiary sector renders services.
Primary, Secondary and Tertiary Sectors
In India, a government agency, named, Central Statistical Organisation (CSO) which computes official estimates of national income and related aggregates has divided the entire economy into following three sectors. Broadly primary sector exploits natural resources; secondary sector transforms one type of commodity into other; and tertiary sector renders services as explained below.
(i) Primary sector (also called Agricultural sector). This sector includes all production units which produce goods by exploiting natural resources. These include resources like water, forests, agricultural land, coal, iron ore and other minerals, etc. Thus, this sector consists of man's primary occupations such as farming, fishing, mining, etc. This sector supplies basic raw material to secondary sector.
(ii) Secondary sector (also called Manufacturing sector). This sector includes all production units which are engaged in producing goods by transforming raw material (received from primary sector) into finished products or one type of commodity into another type of commodity. Examples are cloth mills, sugar mills, steel industry, shoe factory, biscuit factory, etc.
(iii) Tertiary sector (also called Service sector). This sector consists of producing units which are engaged in producing services. For example, banks, transport companies, insurance companies, educational and medical institutions, etc. Thus, tertiary sector provides useful services to the other two sectors.
