Sectors of the Indian Economy
Production and jobs in India
Explain why India's jobs did not shift with its production.
Services now produce the most. Graph 1 compares production in 1977-78 and 2017-18. Over these forty years, production rose in all three sectors, but most in the tertiary sector. By 2017-18, services had become India's largest producing sector, replacing the primary sector.
Why services grew.
- Basic services are needed everywhere: hospitals, schools, post offices, police, courts, banks, transport. In a developing country, the government must provide them.
- As farming and industry grow, they need more transport, trade and storage.
- As incomes rise, people want more services: eating out, tourism, shopping, private hospitals and schools, training.
- New services based on information and communication technology have grown fast.
But not all services are booming. A few employ highly skilled people; a huge number are small shopkeepers, repair workers and transport workers who barely earn a living, because they have no other work.
Jobs did not follow production. Though the primary sector's share of production fell, a similar shift did not happen in jobs (Graph 3). The primary sector is still the largest employer. Why? Not enough jobs were created in the other sectors:
- industrial production rose more than nine times, but industrial jobs rose only about three times;
- service production rose 14 times, but service jobs only about five times.
So more than half of India's workers are in the primary sector, mainly farming, yet they produce only around one-sixth of the GVA.
Laxmi's family: disguised unemployment. Laxmi, a small farmer, owns about two hectares of unirrigated land, growing jowar and arhar on rain alone. All five family members work on it all year, because they have nowhere else to work. Nobody sits idle, but the work is shared out, so no one is fully employed. This is underemployment: people seem to be working, but all work less than they could. Because it is hidden, unlike someone with no job at all, it is called disguised unemployment. If a landlord, Sukhram, hires two of them, or two go to work in a factory, the family earns more and the farm still produces just as much.
Underemployment in towns too. Thousands of casual workers in cities look for daily work as painters, plumbers and repair people, and many do not find work every day. Others push carts or sell on the street all day but earn very little. They do this because they have no better opportunities.
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