NCERT · Class 10 · Social Science · Economics: Sectors of the Indian EconomyExplain the division of economic activities into primary, secondary, and tertiary sectors with suitable examples. Also, discuss why the tertiary sector is gaining importance in India.

Division of Economic Sectors

\nEconomic activities are broadly classified into three main sectors based on the nature of operations:

• Primary Sector: This sector includes activities that are undertaken by directly using natural resources. Agriculture, forestry, fishing, and mining are classic examples. It is called primary because it forms the base for all other products subsequently made.
• Secondary Sector: This sector covers activities in which natural products are changed into other forms through ways of manufacturing that we associate with industrial activity. For example, using cotton fiber from the plant to spin yarn and weave cloth, or making sugar from sugarcane.
• Tertiary Sector: These are 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. Transport, storage, communication, banking, and trade are examples of tertiary activities. Since these activities generate services rather than goods, the tertiary sector is also called the service sector.

Reasons for the Growing Importance of the Tertiary Sector in India

\nOver the past few decades, the tertiary sector has emerged as the largest producing sector in India due to several key factors:

• Provision of Basic Services: In any country, several services such as hospitals, educational institutions, post and telegraph services, police stations, courts, village administrative offices, municipal corporations, defense, transport, banks, and insurance companies are required. The government has taken the responsibility for the provision of these services in a developing country like India.
• Development of Agriculture and Industry: The development of primary and secondary sectors leads to the development of services such as transport, trade, and storage. As the production of goods rises, the demand for these support services increases manifold.
• Rise in Income Levels: As income levels rise, certain sections of people start demanding many more services like eating out, tourism, shopping, private hospitals, private schools, and professional training. This shift is clearly visible in major urban areas.
• Information and Communication Technology: Over the past decade or so, certain new services based on information and communication technology have become important and essential. The production of these services has been expanding rapidly.
• Globalization: With liberalization and globalization, the service sector has seen a massive boom. Call centers, IT services, and international tourism have created numerous jobs, directly contributing to the sector's exponential growth and dominance in the country's GDP.