ntrod     tion     1.13
     Consensus for their robust growth. The Keynesian           banking, insurance, transportation, tourism, etc.
     idea of ‘interventionist state’ seems the ultimate         This sector is also known as the services sector.
     alternative in the present times, as is suggested
     by the US Nobel economist Paul Krugman and                     typEs of EconomiEs
     being followed by the Japanese Prime Minister,
                                                                Depending upon the shares of the particular
     Shinzo Abe (the Three Arrows of Abenomics).
                                                                sectors in the total production of an economy and
                                                                the ratio of the dependent population on them
        sEctors of an Economy                                   for their livelihood, economies are categorised as:
     Every economy tries to maximise the returns
                                                                1. Agrarian Economy
     of economic activities in which it is involved.
     Whatever be the organising principles of an                An economy is called agrarian if its share of the
     economy, the economic activities are broadly               primary sector is 50 per cent or more in the total
     classified into three broad categories, which are          output (the GDP) of the economy. At the time of
     known as the three sectors10 of the economy.               Independence, India was such an economy. But
                                                                now it shows the symptom of a service economy
     1. Primary Sector                                          with the primary sector’s contribution falling
     This sector includes all those economic activities         to almost 18 per cent of its total produce, while
     where there is the direct use of natural resources         almost 49 per cent of the population depends
                                                                on the primary sector for their livelihood. Thus,
     as agriculture, forestry, fishing, fuels, metals,
                                                                in monetary terms India is no more an agrarian
     minerals, etc. In some of the economies, mining
                                                                economy, however the dependency ratio makes
     activities are considered as part of the secondary
                                                                it so—India being the first such example in the
     sector, though we see direct use of natural
                                                                economic history of the world.
     resources here. Broadly, such economies term
     their agricultural sector as the primary sector. This      2. Industrial Economy
     is the case in India.
                                                                If the secondary sector contributes 50 per cent or
     2. Secondary Sector                                        more to the total produce value of an economy, it
                                                                is an industrial economy. Higher the contribution,
     This sector is rightly called the manufacturing            higher is the level of industrialisation. The western
     sector, which uses the produce of the primary              economies which went for early industrialisation
     sector as its raw materials. Since manufacturing           earning faster income and developing early are
     is done by the industries, this sector is also called      known as developed economies. Most of these
     the industrial sector—examples are production of           economies have crossed this phase once the process
     bread and biscuits, cakes, automobiles, textiles,          of industrialisation saturated.
     etc.
                                                                3. Service Economy
     3. Tertiary Sector
                                                                An economy where 50 per cent or more of the
     This sector includes all economic activities where         produced value comes from the tertiary sector is
     different ‘services’ are produced such as education,       known as the service economy. First lot of such
                                                                economies in the world were the early industrialised
       10.   Michael P. Todaro and Stephen C. Smith, Economic
             Development, Pearson Education, 8th Ed., N. Delhi, economies. The tertiary sector provides livelihood
             p. 440.                                            to the largest number of people in such economies.