Sectoral Composition

1.      What is sectoral composition of an economy? Is it necessary that the service sector should contribute maximum to GDP of an economy? Comment.

Answer:

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. 

(i) Agriculture sector includes Agriculture (Agriculture proper & Livestock), Forestry & Logging, Fishing and related activities.

(ii) Industry includes 'Mining & quarrying', Manufacturing (Registered & Unregistered), Electricity, Gas, Water supply, and Construction. 

(iii)Services sector includes 'Trade, hotels, transport, communication and services related to broadcasting', 'Financial, real estate & prof servs', 'Public Administration, defense and other services'.

Services sector is the largest sector of India. 

Services sector accounts for 53.66% of total India's GVA  .  

Industry sector contributes 29.02%. 

Agriculture and allied sector shares 17.32%

What are the major factors responsible for the high growth of the service sector?

Answer:

The major factors responsible for high growth of the service sector are as under :
(i) Development of means of transport and communication due to globalization.
(ii) Development of banking and insurance sector
due to the policy of privatization.
(iii) Expenditure on the development of infrastructure.
(iv) Investment in different service sectors due to
indigenous and foreign institutional investment.
(v) Rapid industrialisation.
(vi) Development of agriculture due to Green Revolution.

14. Agriculture sector appears to be adversely affected by the reform process. Why?

15. Why has the industrial sector performed poorly in the reform period?

16. Discuss economic reforms in India in the light of social justice and welfare.