Primary sector

Also called: Agriculture and related sector, primary activities, Agriculture and allied sector · Topic: Sectors of the Indian Economy · NCERT: Class 6, Ch 14 "Economic Activities Around Us"; Class 10, Ch 2 "Sectors of the Indian Economy"; Class 11, Ch 6 "Employment: Growth, Informalisation and Other Issues"; Class 11, Ch 8 "Comparative Development Experiences of India and its Neighbours"

Meaning

The primary sector is the part of the economy that produces goods by directly using natural resources. It covers agriculture, dairy, fishing, forestry, and mining and quarrying. NCERT also calls it the "agriculture and related sector".

It matters because it is the base of the economy: it supplies the food and raw materials that all later making depends on. It is also still India's largest single employer. Its share of workers fell from 74% (1972-73) to about 46% (2023-24).

Relative productivity of a sector = output share ÷ employment share

Explanation

How it works: nature does most of the "making"

• The test: is the work taking something directly from nature? If yes, it is primary.
• The output is natural products. They come mainly from natural processes:
• Cotton grows because of rain, sunshine and soil.
• Milk comes from the animal's body and the fodder it eats.
• Minerals and ores are formed by geology over very long periods.

• People help, but nature does most of the work.

• Why it is called "primary": it comes first in the chain of production.

• Cotton must be grown before it can become yarn and then cloth (secondary).

• The cloth then has to be moved and sold (tertiary).

• The workers produce raw materials, meaning the basic inputs used to make other goods.

What it includes: the official divisions

• Class 11 (Employment chapter): statistics sort all activity into eight divisions. Two of them are primary:
• (i) Agriculture, which includes crops, livestock, forestry and fishing

• (ii) Mining and quarrying

• Allied activities stay primary because each one uses a natural resource directly:

• dairy and livestock
• fisheries
• forestry

• bee-keeping, flower growing and gardening

• Judge the activity, not the product:

• A dairy farmer rears the animal and gets milk from nature → primary
• A milk vendor only sells the milk → tertiary (trade)
• A person making papad or baskets at home → secondary, because the product changes form. The place of work does not decide the sector.

What makes its share rise or fall

• Why its share of workers falls:
• As an economy grows, workers move from farms to factories and then to services. This is the classic Fisher–Clark path.

• India's farm share of workers fell by more than a third, from 74% (1972-73) to about 46% (2023-24).

• Why its share of output is small:

• Farm output grows slowly because land is limited and farming depends on the monsoon.

• Industry and services grow faster, so agriculture's share of total output shrinks, even when farm output itself is rising.

• What drives growth inside the sector: allied activities, especially livestock, are growing faster than crops.

Worked example: output share vs employment share

• Toy economy: total GVA is ₹100 crore and there are 100 workers.

• GVA (Gross Value Added) = value of output − value of the inputs used up. It measures the new value each producer adds.

• Farming: ₹18 crore GVA and 46 workers → 18 ÷ 46 = 0.39

• Services: ₹55 crore GVA and 29 workers → 55 ÷ 29 = 1.90
• Reading the numbers:
• A value below 1 means each farm worker produces less than the average worker.

• An average services worker produces about 5 times as much as an average farm worker (1.90 ÷ 0.39 ≈ 4.9).

• Link to NCERT: this gap is the root of disguised unemployment in farming.

• Disguised unemployment means more people work on a farm than are needed.

• Their marginal productivity (the extra output from one more worker) is close to zero.

• Caution: the real shares come from different years and sources, so this ratio is only an illustration, not an official statistic.

In India

• Who measures it:
• Employment is measured by the Periodic Labour Force Survey (PLFS). The NSSO (MoSPI) launched it in April 2017 [2].
  • Usual status looks at a person's activity over the last 365 days [2].
  • Current Weekly Status (CWS) looks at the last 7 days [2].

• Output (GVA) is estimated by MoSPI/NSO in the National Accounts Statistics (NAS).

• Employment share:

• NCERT: 74% (1972-73) → about 46% (2023-24).

• Economic Survey 2023-24: more than 45% of the workforce is in agriculture [3].

• Output share: agriculture and allied sectors make up about 18% of total GVA (MoSPI estimates cited by the Ministry of Agriculture, 2023) [4].

• Allied activities are rising fast:
• Livestock's share of agriculture-and-allied GVA (constant prices) rose from 24.32% (2014-15) to 30.38% (2022-23) [3].
• Livestock alone gave 4.66% of total GVA (2022-23) [3].
• Livestock grew at a CAGR of 7.38% (2014-15 to 2022-23) [3]. CAGR (compound annual growth rate) is the average yearly growth over a period.

• Fisheries make up about 6.72% of agricultural GVA [3].

• Women in farm work:

• Female LFPR rose from 23.3% (2017-18) to 41.7% (2023-24) [2]. LFPR (Labour Force Participation Rate) is the share of people who are working or looking for work.

• Rural female LFPR was 47.6% (2023-24), mostly in farm and allied work [2].

• Mining is placed differently by different sources:

• NCERT and PLFS put mining in the primary sector.
• NAS and Economic Survey GVA tables put mining under "Industry". They call the farm part "agriculture, forestry and fishing".

Don't confuse with

• Secondary sector: it changes the form of natural products (cotton → cloth, sugarcane → gur). Primary work only takes the product from nature. A potter or a tailor is secondary, not primary.
• Tertiary sector: it produces no good. It only helps production or gives a service. A milk vendor is tertiary, but a dairy farmer is primary.
• "Industry" in NAS/Economic Survey GVA tables: this group includes mining. So the "agriculture, forestry and fishing" share in the Survey is not the same as the NCERT primary sector.
• Non-farm sector: this means secondary + tertiary together. Construction and electricity, gas and water supply are here, not in the primary sector.

Prelims Hooks

• The primary sector produces goods by directly using natural resources. It is also called the "agriculture and related sector".
• Mining and quarrying is primary in NCERT and PLFS, but falls under "Industry" in NAS and Economic Survey GVA tables.
• Agriculture's share of the workforce: 74% (1972-73) → about 46% (2023-24). It is still the largest single employer.
• Agriculture and allied sectors make up about 18% of total GVA (2023 estimate) [4]. Livestock is 30.38% of agriculture-and-allied GVA (2022-23) [3].
• Bee-keeper, flower grower, fisherman, gardener, dairy farmer = primary. Milk vendor = tertiary. Home-made papad or baskets = secondary.
• PLFS (NSSO, MoSPI, April 2017) measures sector-wise employment. Usual status uses a 365-day reference period and CWS uses 7 days [2].

Mains Points

• Structural change that skipped a step:
• Output moved to services (about 55% of GVA, FY24) [3], but more than 45% of the workforce stayed in agriculture [3].
• About 18% of output [4] is shared by nearly half of all workers → low income per farm worker → disguised unemployment.

• An answer should name the source and year of each share, because GVA and PLFS figures differ.

• Allied activities as a way to raise farm incomes:

• Livestock grew at a 7.38% CAGR (2014-15 to 2022-23) [3], and its share of farm GVA keeps rising [3].

• Dairy, fisheries and food processing can add income without needing more land. This matters especially for rural women, whose LFPR was 47.6% (2023-24) [2].

• Moving workers out of farming (GS-III):

• India needs about 78.5 lakh non-farm jobs a year until 2030 [3].
• Many who leave farms go into construction (13.0% of the workforce) [3], where jobs are mostly informal, casual and seasonal.
• Better paths out of farming include labour-heavy manufacturing, food processing, MSME credit and skilling.

Related concepts

• Secondary sector
• Tertiary sector
• Natural products
• Manufactured goods
• Manufacturer
• Service provider
• Industrial divisions
• Quaternary sector
• Quinary sector

Read more

• Primary, secondary and tertiary sectors: what goes where