1.3   Composition of Gross

. Composition of Gross Domestic Product (GDP) Indian economy is broadly divided into three sector ) Primary Sector: (Agricultural Sector) Agricultural sector is known as primary sector, in which agricultural operations are undertaken. Agriculture based allied activities, production of raw materials such as cattle farm, fishing, mining, forestry, corn, coal, etc., are also undertaken. ) Secondary Sector: (Industrial Sector) Industrial sector is secondary sectors in which the goods and commodities are produced by transforming the raw materials. Important industries are iron and steel industry, cotton textile, jute, sugar, cement, paper, petrochemical, automobile and other small scale industries. Forestry Industry Value added method Tea powder + Milk + Sugar = Tea Value of intermediate goods = Value of final goods Importance of GDP . Study of Economic Growth. . Problems of inflation and deflation. . Comparison with developed countries of the world. . Estimate the purchasing power. . Study of Public Sector. . Guide to economic planning. Limitations of GDP . Several important goods and services are left out of the GDP: The GDP includes only the goods and services sold in the market. The services provided by parents to their children is very important but it is not included in the GDP, because it is not sold in the market. Likewise, clean air, which is vital for a healthy life, has no market value and is left out of the GDP. . GDP measures only quantity but not quality: In the 1970s schools and banks did not permit the use of ballpoint pens. This is because the ones available in India were of very poor quality. Since then, not only has there been a substantial increase in the quantity of ballpoint pens produced in India but their quality has also improved a lot. The improvement in quality of goods is very important but it is not captured by the GDP. . GDP does not tell us about the way income is distributed in the country: The GDP of a country may be growing rapidly but income may be distributed so unequally that only a small percentage of people may be benefitting from it. - - . . AM - - . . AM Gross Domestic Product and its Growth: an Introduction In the th century, economists began to suggest that, traditional tertiary services could be further distinguished from “quaternary” and “quinary” service sectors.