2016

PREPARED BY : ARUN PRATAP SINGH

INDIAN ECONOMY

STRUCTURE OF INDIAN ECONOMY :

Economy is a framework in which economic activities take place and therefore gives income in
return. People around us are engaged in different activities to earn livelihood, some may be
producing goods while others may be delivering services.

The economy of India is the ninth-largest in the world by nominal GDP and the third-largest by
purchasing power parity (PPP).
There are two ways to measure GDP (total income of a country) of different countries and compare
them. One way, called GDP at exchange rate, is when the currencies of all countries are converted
into USD (United States Dollar). The second way is GDP (PPP) or GDP at Purchasing Power
Parity (PPP).

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PPP is used worldwide to compare the income levels in different countries. The theory aims to
determine the adjustments needed to be made in the exchange rates of two currencies to make them
at par with the purchasing power of each other. In other words, the expenditure on a similar
commodity must be same in both currencies when accounted for exchange rate.
Example: Let's say that a pair of shoes costs Rs 2500 in India. Then it should cost $50 in America
when the exchange rate is 50 between the dollar and the rupee.

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PRIMARY

SECONDARY

TERTIARY

PRIMARY SECTOR :

When the economic activity depends mainly on exploitation of natural resources then
that activity comes under the primary sector.

Agriculture and agriculture related activities are the primary sectors of economy.

For example : Agriculture, fishing, mining etc.

In other words a primary sector is a sector whereby the raw materials are extracted from
earth.

SECONDARY SECTOR :

A secondary sector is a sector whereby the raw material that is extracted from earth is
converted to semi- finished goods or finished goods.

Or we can say that the economic activities which are related to the manufacturing
process. for e.g., manufacturing of steel, falls under secondary sector.

TERTIARY SECTOR :

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A tertiary sector is a sector that transports and distributes goods to retailers or

wholesalers.
The economic activities that are mostly based on providing service to the society, like
transportation, banking, insurance, etc. falls under tertiary sector.
The 3 Sectors Are Dependent On Each Other and each sector is important.

Each sector is important because if there was one sector that did not exist there other
sectors would also not exist. And it would have a bad influence in our economy

How it is interdependent we can take an example for it

To understand this interdependency, let us take an example of a cold drink. A
cold drink contains water, sugar and artificial flavour.
Suppose if there is no sugarcane production then procuring sugar will become
difficult and costly for the cold drink manufacturer.
Now to transport sugarcane to sugar mills and sugar to the cold drink plant needs
the services of a transporter.
The value 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
gives the Gross Domestic Product of a country. GDP shows how big the economy of a country
is.

INDIAN ECONOMY

Classification (on the basis of ownership) :

Public Sector :
The government owns most of the assets and provides all the services.
Private Sector :
Ownership of assets and delivery of services is in the hands of private individuals or companies.

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Classification (on the basis of employment) :

Organized Sector :
People have assured work and terms of employment are regular.

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Unorganized Sector :
It consists of small and scattered which are not in the control of the government. It has low pay
and unsecured jobs.

Workers under unorganized sector need protection.

They are paid low salaries, therefore they are not able to fulfill even their basic needs.

They are exploited.

Employment is there but not on regular basis they can be thrown out any time without
any rhyme or reason.

Other than salary which is very low they dont get any other benefits.

These workers also face social discrimination.

Protection and support to the unorganized sector is both necessary for economic and
social development.

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Natural Resources :
Natural resources are utilizable materials derived from the environment. Resources are classified
as either biotic or abiotic on the basis of their origin. The Indian landmass contains a multitude of
both types of resource and its economy, especially in rural areas, is heavily dependent on their
consumption or export.

Natural
Resouces

BIOTIC

Resources have three main characteristics:

Utility
Quantity (often in terms of availability)
Consumption.

ABIOTIC

INDIAN ECONOMY

Natural resources are derived from the environment. Many of them are essential for our survival
while others are used for satisfying our needs. Natural resources may be further classified in
different ways; on the basis of origin, resources may be divided into.
Biotic - Biotic resources are those obtained from the biosphere. Forests and their products,
animals, birds and their products, fish and other marine organisms are important examples.
Minerals such as coal and petroleum are also included in this category because they were formed
from decayed organic matter.
Abiotic - Abiotic resources comprise non-living things. For examples include land, water, air and
minerals such as gold, iron, copper, silver etc.
India's most important natural resources are land and water.

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