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Rising Importance of the Tertiary Sector


Over the past 30 years, while production has increased in all the 3 sectors , it has increased the most in the tertiary sector.

The reasons for the fast development of the tertiary sector in India are as follows:-

  • The necessity for ‘basic services’ like hospitals, educational institutions, post and telegraph services, police stations, courts, administrative offices, defense, transport and banking services have increased with the increase in population.

  • The development in the Agricultural and Industrial sectors has increased the need for services such as transportation, storage and trade.

  • As the income of the people increased the demand for services in tourism, retailing, catering and elite education also increased.

  • With higher income people have started traveling long distances for work and education, resulting in the need for increased services in the transport and communication sector.

  • Employment of people

    When we talk of employment on the national level, 2 things have to be taken into account.

    1) Share of each sector in DGP.
    2) Share of each sector in employment.

    Let us look into the results of a survey conducted a few years ago.

    1) Share of each sector in DGP

    i) Primary sector - 25%
    ii) Secondary sector - 25%
    iii) Tertiary sector - 50%


    2) Share of each sector in employment

    i) Primary sector - 60 %
    ii) Secondary sector - 20 %
    iii) Tertiary sector - 20 %

    In the Agricultural sector (Primary sector), while the employment is 60 %, the GDP is only 25 % . That means there are more people in this sector than is necessary. In other words this sector is underemployed.

    Let me explain this with an example.

    Example: There are 5 members in a family that owns a small agricultural land. All the 5 members work on this land. But the same work can be done by just 2 members. That means all the 5 members are working less than their potential. This situation is called under - employment or disguised unemployment.


    If the extra 3 members seek employment elsewhere, the family income will be augmented. The reason why they are not seeking employment elsewhere may be due to various reasons like illiteracy, ignorance, inability or lethargy.

    This disguised unemployment can happen in other sector also. Thousands of casual labourers in the service sector, like painters, plumbers, repair persons are not working to their optimum capacity.


    Creating more employment

    Let us see how the government can tackle the problem of unemployment in the Agricultural sector.
    • Loans could be given to farmers to dig wells to irrigate their land.
    • Seeds and fertilizers could be subsidized.
    • Dams can be built to irrigate dry areas.
    • Transport facilities could be increased.
    • Storage facilities could be provided.
    • Industries and other service related companies could be relocated in rural areas so that the underemployed people of the agricultural sector could find work.
    • More schools could be started to educate the rural population to help them become employable.

    Planning Commission

    The Planning Commission is a body set up by the Central government , that chalks out programmes to tackle unemployment and related problems in addition to its major task of planning the economy of the nation.

    The following are some of the findings of the Planning Commission.

    • 20 lakh jobs can be created in the education sector alone, by starting more schools and colleges in rural and semi-rural areas. This in turn will educate a multitude of children, who will eventually become employable.
    • 35 lakh people could find employment if the tourism industry was developed in every state.
    • Rural craft industry could be boosted along with the tourism industry giving employment to thousands of rural unemployed citizens.
    • Development of the IT services could generate lakhs of jobs for the urban unemployed.

    NREGA 2005

    The National Rural Employment Guarantee Act 2005 (NREGA 2005) is a law passed by the Government of India to implement the Right to Work in 200 districts. 

    Under NREGA 2005,all those who are able to, and are in need of, work have been guaranteed 100 days of employment in a year by the government. If the government fails in its duty to provide employment, it will give unemployment allowances to the people.

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