Dr. A.

MARIYASELVI
Assistant Professor of Commerce, St. Joseph’s College, Trichy, Tamil Nadu

M.AAKASH CHARAN III BCOM SHIFT 2 ,St.joseph’s college,Trichy,tamil nadu

ABSTRACT
India is one of the fastest-growing economies in the world and it is predicted that by 2050, it will
become the second-largest economy in the world. There are three sectors which plays a
significant role in the development of nation. The agricultural sector, industrial sector and
service sector. As we know that the dependents in agricultural sector is more and their per capita
income is less. But most part of our rural India is still depending up on Agricultural sector only.
This paper explains about the role and importance of the primary sector in Indian economy. As
we know that India is second largest populated country and seventh largest country in
geographical level. The economy of the country is scattered in various areas like manufacturing
industries, agriculture, textile, services. Doing agriculture is a major livelihood activity in India.
Mahatma Gandhi said “Indian economy lives in rural villages”. The great economists and other
great people must think about how to economically strengthen our nation by strengthening
agricultural sector in India. It is evident that majority portion of agricultural based food products
are exporting from India. Overall, the primary sector plays a fundamental role in providing the
necessities of life and supporting economic development.

Keywords: Indian Agriculture, Agricultural Sector, Agriculture and allied activities, Benefits
and issues of primary sectors, etc.

ROLE AND IMPORTANCE OF THE PRIMARY SECTOR IN THE

INDIAN ECONOMY

Introduction
India is one of the fastest-growing economies in the world and it is predicted that by 2050, it will
become the second-largest economy in the world. There are many factors that contribute to the
economy. There are three sectors which play a significant role in the development of the nation:
agricultural sector, industrial sector and service sector. The primary sector plays a crucial role in
the growth of our economy and ensures we have the necessities for daily life. The primary sector
is concerned with extraction of raw material. It includes fishing, farming and mining, livestock
forestry and some more which includes the production of raw materials. It's characterized by the
transformation of natural resources into primary products, which serve as raw materials for other
industries. The majority of India's national income comes from the primary sector.
The Primary Sector

The Indian economy is largely dependent on the primary sector. The primary sectors include
those factors which make use of natural resources in order to manufacture goods and execute
various resources. Agriculture is the most important primary sector activity of the Indian
economy. Workers in this sector typically engage in tasks like growing crops, catching fish,
cutting trees, and extracting minerals from the earth. These activities are essential for obtaining
raw materials that serve as the foundation for the production of goods in other sectors of the
economy. They are together termed as the agriculture and allied sectors. About 54 % of the
Indians depend upon agriculture and allied activity for their livelihood. However, the
contribution of agriculture and allied sectors to the Indian economy is only about a quarter.

So even though agriculture is the main occupation of Indians, it does not support the economy
well. The people engaged in primary sector activities earn a lot less as compared to the other two
sectors. This is because the primary sector activities are not very profitable, plus most people
turn to this activity because of unemployment. Hence, the primary sector in India has not reached
its full potential.

ROLE AND IMPORTANCE OF PRIMARY SECTOR

In the primary sector agriculture is the predominance occupation and has the largest share in
national income. So let us concentrate on the role and importance of agriculture in the Indian
economy in terms of its share in the national income, providing employment food and raw
materials. Let us take them one by one.

1. Share in National income

Agriculture contributed more than half of the national income during 1947. Its contribution has
decreased in current years. According to estimates of annual national income released by the
national statistical office, agriculture and the allied sector contributed about 18.4% to the
national income in 2019-20.

2. Providing employment to largest section of population

Agriculture is the backbone of the nation's economy. It is the primary occupation of the majority
of the country's population. During 1947, approximately 70% of the population relied on
agriculture and allied activities. With the growth of the manufacturing and service sectors,
dependency on the primary sector has decreased. According to available data, in 2019, the
primary sector was employing about 42.6% of the country's population.

3. Providing Food to Millions

Food is the basic human requirement for survival. Agriculture can become extinct without food
production and distribution. The country's food demand is very high and rising year after year
due to population growth. As per data, in 2019-20, the food grain production in the country was
around 295.67 million tonnes. This comprises wheat, rice, coarse cereals, maize, tur, gram and
pulses.
4. Providing raw materials to industries
Industries such as sugar, jute, cotton textiles, vanaspati etc. get their raw materials from
agriculture. Do you know how paper is made? It requires a special type of grass, bamboo etc.
Without agriculture paper production is not possible. Look at the food processing industry which
is supplying so many different varieties of packed food items such as pickles, fruit jam, juice,
biscuits, bread, semi –prepared food etc. Food processing industry is operating because of
agriculture only.

Activities Under Primary Sector

In the primary sector of the economy, activities involve using natural resources, which include
land, water, forest, raw materials and minerals. People who work in the primary sector are red-
collar workers because of the outdoor nature of their work. Usually, in most underdeveloped
countries, the primary sector predominates. Here are some of the major activities that come
under the primary sector:

1. Agriculture and allied activities: Farming and its various forms fall under the primary
sector. Raising livestock and growing crops represent the development and cultivation of raw
materials. This involves growing crops like wheat and rice, and raising animals like cows and
chickens for food or other products.

2. Fishery: Commercial fishing is a primary sector job where fishers catch and sell fish.
Catching fish from rivers, lakes, or the sea, either for food or as a business. A primary sector
fishing company can operate a large vessel with mass gathering technique or by an individual or
a small group that uses line fishing to catch fish for sale.

3. Forestry: The forestry industry harvests trees from forests or tree farms. Catching fish from
rivers, lakes, or the sea, either for food or as a business. This provides the raw materials required
for the production of wood for use by various secondary and tertiary sector businesses.

4. Mining: A mining company extracts ore and other raw materials from the earth and digging
up minerals from the earth like coal, gold or diamonds. Methods of mining can vary depending
on the raw materials a company extracts. A primary sector mining company may work with
secondary or tertiary companies across a wide range of industries depending on the raw materials
it gathers.

5. Hunting: It is the process of killing animals for their meat, hides and other products to sell as
raw materials to other industries. Hunters may employ various tools, the most common of which
are bows, rifles and shotguns, with different animals requiring distinct hunting techniques.
Primary Sector of the Indian Economy

The primary sector is very important because it provides jobs for many people and contributes a
big part to the country’s economy. Let’s understand a few concepts about the Primary Sector
below:

Agro-Industry as a Primary Sector

Agriculture is a big deal in India. Many people work as farmers, growing crops like rice, wheat,
and vegetables. They also raise animals like cows and buffaloes for milk and meat. Fishing is
another part of agriculture, where people catch fish from rivers, lakes, and oceans. Farmers in
India use different methods to grow crops. Some use traditional methods passed down through
generations, while others use modern techniques and machinery to increase productivity.

Challenges of a Primary Sector

Despite its importance, farming in India faces challenges. Small land holdings, unpredictable
weather, and lack of proper infrastructure make farming easier. Farmers also struggle with debts
and face risks due to crop failures.

Government Support for the Primary Sector

The government tries to help farmers by providing subsidies, loans, and irrigation facilities.
Programs like PMKSY (Pradhan Mantri Krishi Sinchayee Yojana) and PMFBY (Pradhan
Mantri Fasal Bima Yojana) aim to improve farming practices and financially assist needy
farmers.

Diversification in the Primary Sector

Apart from traditional farming, there’s a growing trend towards diversification. Farmers are
exploring other activities like horticulture, poultry farming, and fishery to increase their income
and reduce risks.

Livestock and Fisheries as a Primary Sector

Livestock farming, including dairy and poultry, is a significant part of the primary sector—many
people rear animals for milk, meat, and other products. Fishing is also important, especially in
coastal areas, where people catch fish for food and sale.

Benefits of the Primary Sector

• Jobs for Many People: The primary sector, including farming, fishing, mining, and
more, gives jobs to many people, especially in villages and rural areas.
• Helps the Economy: It’s super important for the country’s economy because it provides
materials for making things. Many industries, like food processing and construction,
depend on these materials.
• Food for Everyone: Farming, a big part of the primary sector, ensures there’s enough
food for everyone. This helps keep food prices stable and ensures everyone has enough to
eat.
• Supports Villages: The primary sector helps villages grow by giving people jobs and
supporting local businesses. This means fewer people need to move to cities to find work.
• Earns Money from Exports: Some things made in the primary sector, like crops and
minerals are sold to other countries. This brings in money for the government and helps
balance the economy.
• Protects the Environment: Some activities in the primary sector, like organic farming
and planting trees, help keep the environment healthy. By taking care of nature, we
ensure resources are available for the future.
• Preserves Culture: Many traditions and practices in the primary sector have been passed
down through generations. Keeping these alive adds to the diversity and richness of our
society.
• Brings People Together: Working in the primary sector often involves teamwork and
cooperation, strengthening community bonds.
• Opportunities for New Things: The primary sector can produce new ideas and
products. For example, crops can be turned into packaged foods or materials from forests
can be used to make clothes.
• Uses New Technology: The primary sector keeps improving with new machines and
ways of doing things. This makes work easier and helps produce more.

Issues of the primary sector

1. Export revenue

Making use of natural resources can be away for an economy to gain income and export
revenue. The sale of oil, gas and other natural resources have enriched many developing
economies enabling them to gain capital to invest in public services within the economy.
Some Oil-rich countries have successfully used the increase in revenue to save for the
future, e.g. Qatar, Saudi Arabia, Norway.

2. Monopoly Power

One problem with relying on the primary sector is that often wealth becomes inequitably
distributed. For example, a small number of firms gain monopoly power over the
production of raw materials and pay workers only a small fraction of the revenue gained.
Many developing countries in Africa have remained poor, despite being rich in raw
materials. A large primary sector is not sufficient on its own to lead to economic
development
3.Volatility

Primary products are liable to be volatile in both price and output. Commodities, such a
soil and food stuffs can see large swings in price. Demand is quite price inelastic. If
prices fall, then countries which are based on one particular industry can see a large fall
in revenue, causing problems. The EU retains significant support for EU agriculture
through subsidies and price support.

4. Dutch Disease

If primary products are very profitable, then the resources will be diverted away from
other manufacturing industries and concentrated on just primary industries. The problem
is that when the raw materials run out or the industry declines, the economy lacks a broad
diversification. This can be known as the ‘Dutch disease’ or resource curse.

5. Deindustrialisation

In developed economies we have seen a decline in primary sectors, as they take a smaller
share of the economy, this can lead to structural unemployment for a period.
Conclusion

The Indian economy is regarded as one of the largest economies in the world due to its large
population. The economy of India is divided into three sectors, the primary sector, the secondary
sector and tertiary sector. The primary sector is regarded as the backbone of the Indian economy.
This is because half of the Indian population depends upon the primary sector for livelihood.

The primary sector, comprising agriculture, forestry, fishing and mining, plays a crucial role in
the Indian economy by providing employment to a significant portion of the population and
contributing substantially to the GDP. It is the backbone of rural India, ensuring food security,
raw materials for industries, and export revenues. Despite its declining share in GDP over the
years due to the growth of secondary and tertiary sectors, the primary sector remains essential for
socio-economic stability, rural development, and poverty alleviation. Strengthening this sector
through technological advancements, better infrastructure, and supportive policies is vital for
inclusive and sustainable economic growth in India.

Government subsidies in the primary sectors are critical for enhancing productivity, supporting
farmers, and ensuring food security. Effective targeting and management of these subsidies,
alongside structural reforms, can lead to sustainable growth and economic resilience.