What is sectoral
composition of an economy? Is it necessary that the service sector should
contribute maximum to GDP of an economy? Comment.
It is necessary that at the later stages of development, the service sector should contribute the maximum to the total GDP. There exists a phenomenon called structural transformation which implies that gradually the country’s dependence on the agricultural sector will shift from the maximum to minimum and at the same time, the share of industrial and service sector in the total GDP will increase. This structural transformation together with the economic growth is termed as economic development.
The sectoral
composition of an economy is the proportionate contribution of different
sectors to the total Gross Domestic Product (GDP) of an economy during a year.
It gives the share of agricultural sector, industrial sector and service sector
in GDP.
It is necessary that at the later stages of development, the service sector should contribute the maximum to the total GDP. There exists a phenomenon called structural transformation which implies that gradually the country’s dependence on the agricultural sector will shift from the maximum to minimum and at the same time, the share of industrial and service sector in the total GDP will increase. This structural transformation together with the economic growth is termed as economic development.
Indian economy is classified in three sectors — Agriculture and allied, Industry and Services. Agriculture sector includes Agriculture (Agriculture proper & Livestock), Forestry & Logging, Fishing and related activities. Industry includes 'Mining & quarrying', Manufacturing (Registered & Unregistered), Electricity, Gas, Water supply, and Construction. Services sector includes 'Trade, hotels, transport, communication and services related to broadcasting', 'Financial, real estate & prof servs', 'Public Administration, defence and other services'.
Services sector is the largest sector of India. Gross Value Added (GVA) at current prices for Services sector is estimated at 73.79 lakh crore INR in 2016-17. Services sector accounts for 53.66% of total India's GVA of 137.51 lakh crore Indian rupees. With GVA of Rs. 39.90 lakh crore, Industry sector contributes 29.02%. While, Agriculture and allied sector shares 17.32% and GVA is around of 23.82 lakh crore INR.
At 2011-12 prices, composition of Agriculture & allied, Industry, and Services sector are 15.11%, 31.12%, and 53.77%, respectively.
According to CIA Fackbook sector wise Indian GDP composition in 2014 are as follows : Agriculture (17.9%), Industry (24.2%) and Services (57.9%). Total production of agriculture sector is $366.92 billion. India is 2nd larger producer of agriculture product. India accounts for 7.68 percent of total global agricultural output. GDP of Industry sector is $495.62 billion and world rank is 12. In Services sector, India world rank is 11 and GDP is $1185.79 billion. Contribution of Agriculture sector in Indian economy is much higher than world's average (6.1%). Contribution of Industry and Services sector is lower than world's average 30.5% for Industry sector and 63.5% for Services sector.
At previous methodology, composition of Agriculture & allied, Industry, and Services sector was 51.81%, 14.16%, and 33.25%, respectively at current prices in 1950-51. Share of Agriculture & allied sector has declined at 18.20% in 2013-14. Share of Services sector has improved to 57.03%. Share of Industry sector has also increased to 24.77%
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