UPSC Prelims 2024 Q45: Sectors of the Indian Economy — Explained
With reference to the sectors of the Indian economy, consider the following pairs:
| Sl.No. | Economic activity | Sector |
| 1 | Storage of agricultural produce | Secondary |
| 2 | Dairy farm | Primary |
| 3 | Mineral exploration | Tertiary |
| 4 | Weaving cloth | Secondary |
How many of the pairs given above are correctly matched?
- Only one
- Only two
- Only three
- All four
Answer: (b) Only two
Statement-wise explanation
- 1: incorrect — Storing farm produce does not change the product into anything new. It is a service that helps production. In India's National Industrial Classification (NIC 2008), 'Warehousing and storage' is Group 521 under Section H, 'Transportation and storage'. MoSPI's national accounts count this in the tertiary sector, with trade, transport and communication. The pair should read Storage of agricultural produce – Tertiary.
- 2: correct — A dairy farm rears cattle and gets milk straight from the animals. That is animal husbandry, which is part of agriculture. NIC 2008 puts 'Animal production' (Group 014) in Section A, 'Agriculture, forestry and fishing'. MoSPI's primary sector covers agriculture, livestock, forestry, fishing, and mining and quarrying. Processing milk into butter or cheese is different: 'Manufacture of dairy products' (Group 105) is manufacturing, which is secondary.
- 3: incorrect — Mineral exploration belongs to mining, and mining takes resources directly from nature. So it is a primary activity. NIC 2008 lists 'Mining support service activities' (Division 09), which include exploration, under Section B, 'Mining and quarrying'. MoSPI counts mining and quarrying in the primary sector. Calling exploration a service does not make it tertiary, because it serves the extraction of minerals.
- 4: correct — Weaving turns yarn into cloth. Changing a raw material into a new, more useful product is what defines the secondary sector. NIC 2008 lists 'Spinning, weaving and finishing of textiles' (Group 131) under Section C, 'Manufacturing'.
How to eliminate
Use one test for every pair: does the activity take something from nature (primary), turn it into a new product (secondary), or provide a service without making a good (tertiary)? Weaving makes cloth from yarn, so pair 4 is clearly right. A dairy farm gets milk from animals, which is plain animal husbandry, so pair 2 is clearly right. Storage changes nothing about the grain, so pair 1 cannot be secondary. That already gives at least two correct pairs and rules out 'All four'. Whether the answer is two or three depends only on pair 3, and you can settle it only by knowing one fact: exploration is part of mining, and mining is primary. Do not let the word 'exploration' make it sound like a service. Two more traps to remember: (i) raw milk on the farm is primary, but processed dairy products are secondary; (ii) storage, cold storage and warehousing are tertiary, even when they handle farm produce.
Know more
The three-sector model. Economic activities are grouped by how they relate to natural resources.
- Primary activities take resources directly from nature: farming, rearing livestock, forestry, fishing, mining and quarrying.
- Secondary activities change natural products into other forms through manufacturing. Construction and utilities such as electricity, gas and water supply are also in this group.
- Tertiary (service) activities do not make goods. They support production and consumption through trade, transport, storage, communication, banking, real estate, public administration and other services.
In its GDP press notes, MoSPI groups output the same way:
| Sector | What MoSPI includes | Example activities |
|---|---|---|
| Primary | Agriculture, livestock, forestry & fishing; mining & quarrying | Dairy farm, fish catch, coal mining, mineral exploration |
| Secondary | Manufacturing; electricity, gas, water supply & other utilities; construction | Weaving, milk processing, steel making, building roads |
| Tertiary | Trade, hotels, transport, storage, communication & broadcasting services; financial, real estate & professional services; public administration, defence & other services | Warehousing, cold storage, banking, IT services, teaching |
Value chains cross sectors. One chain can pass through all three sectors. Milk from a dairy farm is primary. Turning it into cheese is secondary. Keeping it in a cold store and transporting it are tertiary. Cotton farming, then weaving, then the cloth shop follow the same pattern. NCERT's AMUL example makes this point.
Watch the label. Some MoSPI tables also use a broad 'Industry' head, which puts mining together with manufacturing, utilities and construction. In the textbook three-sector model, used by NCERT, mining stays in the primary sector.
Beyond tertiary. Geography textbooks split off knowledge-based work as quaternary (research, information) and top-level decision-making as quinary. In national accounts, both are counted as tertiary.
NCERT Concepts to Revise
- Primary sector: Pairs 2 and 3 depend on what counts as directly using natural resources, such as animals and mineral deposits.
- Secondary sector: Pairs 1 and 4 both claim 'Secondary', so you need to know which activity actually changes a natural product into a new form.
- Tertiary sector: Tells you which activities help production without making a good. Two of the four activities need to be checked against this.
- Secondary activities: The cotton-into-cloth example in this definition applies directly to the weaving pair.
- Tertiary activities: Helps you decide whether storing produce or exploring for minerals is a service or a goods-producing activity.
- Primary activities: Activities that depend directly on the environment, such as rearing animals or finding ore, belong in this group.