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A Graph given below shows the share of sectors in GDP (%) of the economy. Analyze the data provided and answer the following question.
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How does the graph reflect the structural change in the Indian economy from 1973-74 to 2013-14? Explain with any 3 relevant reasons.
Answer:
Answer by Student
- The graph shows that the share of primary sector in GDP has declined because of the low productivity and demand of agriculture and allied activities.
- The graph shows that the share of secondary sector in GDP has increased from because of the industrial policy reforms and infrastructure development that encouraged manufacturing and construction.
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- The graph shows that the share of tertiary sector in GDP has increased because of the growth of income and education levels that increased the demand for services such as trade, banking, health, education, etc.
Detailed Answer by Teachoo
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The graph shows that the share of
primary sector
in GDP has declined from
41.86%
in 1973-74 to
13.94%
in 2013-14. This means that the contribution of agriculture and allied activities to the national income has reduced over time. This is because of the following reason:
- The productivity of agriculture has not increased much due to lack of modernization, irrigation, credit, etc. This has resulted in low income and employment opportunities for the farmers and agricultural workers.
- The relative prices of agricultural products have also fallen due to global competition and trade liberalization. This has reduced the profitability and attractiveness of agriculture as a source of livelihood
- The graph shows that the share of secondary sector in GDP has increased from 12% in 1973-74 to 24.03% in 2013-14. This means that the contribution of manufacturing and construction to the national income has increased over time. This is because of the following reason:
- The industrial policy reforms since 1991 have encouraged private investment, foreign direct investment, and competition in the industrial sector. This has led to the growth and diversification of industries such as textiles, chemicals, automobiles, electronics, etc.
- The infrastructure development such as power, transport, communication, etc. has facilitated the expansion and integration of the industrial sector. This has improved the efficiency and productivity of the industrial activities and reduced the cost of production and distribution.
- The graph shows that the share of tertiary sector in GDP has increased from 33.69% in 1973-74 to 56.03% in 2013-14. This means that the contribution of services such as trade, banking, insurance, education, health, etc. to the national income has increased over time. This is because of the following reason:
- The growth of income and education levels has increased the demand for various services such as health, education, entertainment, tourism, etc. These services enhance the quality of life and well-being of the people and require skilled and specialized personnel.
- The liberalization and globalization of the economy have opened up new opportunities for services such as information technology, business process outsourcing, consultancy, etc. These services have a high value addition and export potential and generate high income and employment for the service providers.
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