Economics Notes on Role of Different Sector in Indian Economy

By BYJU'S Exam Prep

Updated on: September 25th, 2023

In this post, we are providing notes on Role of Different Sector in Indian Economy. Economics always plays an important role in competitive exam. In SSC CGL it stands for 6 to 7 marks.

Role of Different Sector:

Historically, India has classified and tracked its economy and GDP as three sectors — agriculture, industry, and services. Agriculture includes crops, horticulture, milk and animal husbandry, aquaculture, fishing, sericulture, forestry and related activities.Industry includes various manufacturing sub-sectors. India’s definition of services sector includes its construction, retail, software, IT, communications, hospitality, infrastructure operations, education, health care, banking and insurance, and many other economic activities.Service sector is the largest sector of India. Gross Value Added (GVA) at current prices for Services sector is estimated at 61.18 lakh crore INR in 2014-15. Service sector accounts for 52.97% of total India’s GVA of 115.50 lakh crore Indian rupees. With GVA of Rs. 34.67 lakh crore, Industry sector contributes 30.02%. While  Agriculture and allied sector share 17.01% and GVA is around of 19.65 lakh crore INR.

Role of Agriculture in Indian Economy

  • Today, India ranks second worldwide in farm output.
  • As per estimates by the Central Statistics Office (CSO), the share of agriculture and allied sectors (including agriculture, livestock, forestry and fishery) was 15.35 per cent of the Gross Value Added (GVA) during 2015–16 at 2011–12 prices.
  • India is the largest producer, consumer, and exporter of spices and spice products.
  • India’s fruit production has grown faster than vegetables making it the second largest fruit producer in the world.
  • India’s horticulture output, comprising fruits, vegetables, and spices, has reached a record high of 283.5 million tonnes (MT) in 2014-15.
  • It ranks third in farm and agriculture outputs.
  • Agricultural export constitutes 10 per cent of the country’s exports and is the fourth-largest exported principal commodity.
  • The agro-industry in India is divided into several sub-segments such as canned, dairy, processed, frozen food to fisheries, meat, poultry, and food grains.
  • The Department of Agriculture and Cooperation under the Ministry of Agriculture is responsible for the development of the agriculture sector in India. It manages several other bodies, such as the National Dairy Development Board (NDDB), to develop other allied agricultural sectors.
  • As per the 3rd Advance Estimates, India’s food grain production has increased marginally to 252.23 million tonnes (MT) in the 2015-16 crop year. Production of pulses is estimated at 17.06 million tonnes.
  • With an annual output of 146.31 MT, India is the largest producer of milk, accounting for 18.5 percent of the total world production.
  • It also has the largest bovine population. India, the second-largest producer of sugar, accounts for 14 percent of the global output. It is the sixth-largest exporter of sugar, accounting for 2.76 per cent of the global exports.
  • The Spices Board of India has decided to set up a spice museum at Willingdon Island in Kochi to attract and educate tourists and seafarers about the history and growth of Indian spices industry.

Some major investments and developments in agriculture in the recent past are as follows:

  • ITC Ltd, one of India’s leading fast-moving consumer goods (FMCG) company, plans to make Andhra Pradesh a hub for its agricultural business operations.
  • The Small Farmers’ Agri-Business Consortium (SFAC) plans to organise camps in Madhya Pradesh and Chhattisgarh to promote its venture capital assistance scheme (VCAS), which seeks to provide capital and project development facility (PDF) to agri-business entrepreneurs.
  • Mahindra & Mahindra (M&M), India’s leading tractor and utility vehicle manufacturer, announced its entry into pulses retailing under the brand ‘NuPro’. Going forward, the company plans to foray into e-retailing and sale of dairy products.
  • Fertiliser cooperative IFFCO launched a joint venture with Japanese firm Mitsubishi Corp for manufacturing agrochemicals in India.
  • Rabo Equity Advisors, the private equity arm of Netherlands-based Rabo Group, raised US$ 100 million for the first close of its second fund – India Agri Business Fund II. The fund plans to invest US$ 15–17 million in 10–12 companies.
  • Oman India Joint Investment Fund (OIJIF), a joint venture (JV) between the State Bank of India (SBI) and State General Reserve Fund (SGRF), invested Rs 95 crore (US$ 13.94 million) in GSP Crop Science, a Gujarat-based agrochemicals company.


Some of the recent major government initiatives in the sector are as follows:

  • Prime Minister Mr Narendra Modi has unveiled the operational guidelines for the Pradhan Mantri Fasal Bima Yojana which aims to provide farmers with crop insurance.
  • The Cabinet Committee on Economic Affairs (CCEA) has approved ‘Blue Revolution’, an umbrella scheme for integrated development and management of fisheries by Government of India, with the  total financial outlay of Rs 3,000 crore (US$ 440.15 million) for a period of five years.
  • The new crop insurance scheme for farmers ‘Bhartiya Krishi Bima Yojana’ aims to cover 50 per cent of the farmers under the scheme in the next two-three years,
  • Gujarat Government has planned to connect 26 Agricultural Produce Market Committees (APMCs) via the electronic market platform, under the National Agriculture Market (NAM) initiative.

According to the National Institution for Transforming India Aayog (NITI Aayog), India’s agriculture sector is expected to grow 6 percent in FY 2016-17 in case of normal monsoon during the June-September period. The 12th Five-Year Plan estimates the foodgrains storage capacity to expand to 35 MT. Also, a 4 percent growth would help restructure the agriculture sector in India in the next few years.

Role of Manufacturing Sector in Indian Economy

  • Manufacturing has emerged as one of the high growth sectors in India. Industry accounts for 26% of GDP and employs 22% of the total workforce.
  • According to the World Bank, India’s industrial manufacturing GDP output in 2015 was 6th largest in the world on current US dollar basis ($559 billion), and 9th largest on the inflation adjusted constant 2005 US dollar basis ($197.1 billion).
  • Prime Minister of India, Mr Narendra Modi, had launched the ‘Make in India’ program to place India on the world map as a manufacturing hub and give global recognition to the Indian economy.
  • India’s manufacturing sector has the potential to touch US$ 1 trillion by 2025. There is potential for the sector to account for 25-30 percent of the country’s GDP and create up to 90 million domestic jobs by 2025.

Role of Service Sector in Indian Economy

  • The services sector is not only the dominant sector in India’s Gross Domestic Product (GDP) but has also attracted significant foreign investment flows, contributed significantly to exports as well as provided large-scale employment.
  • Indian service sector grew at approximately 8 per cent per annum and contributed to about 64 percent of India’s GDP in FY 2015-16.
  • The services sector is the key driver of India’s economic growth. The sector contributed around 66.1 per cent of its Gross Value Added growth in 2015-16, thereby becoming an important net foreign exchange earner and the most attractive sector for FDI (Foreign Direct Investment) inflows.
  • India is the eighth largest services exporter in the world.
  • Out of overall services sector, the sub-sector comprising financial services, realstate and professional services contributed 21.6 per cent to the GDP, and grew the fastest among all sub-segments at 10.3 per cent year-on-year in 2015-16.
  • The sub-sector of trade, hotels, transport, communication and services related to broadcasting contributed 12.6 percent the GDP. The third-largest sub-segment comprising public administration, defence,and other services contributed nearly 12.6 % to the GDP.

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