GDP of India: Sector wise contribution in Gross Domestic Product> How Can India Improve Its G.D.P

 

Pic - :: An ILLUSIONARY GRAPHICAL REPRESENTATION Of An G.D.P Bar Illustration 

GDP of India: Sector wise contribution in Gross Domestic Product in 2020-21

This srticle actually has the data base of 2020-2021 however that database could be used to actually put a pointer to the sphere within the G.D.P for India to enhance its growth of INCOME  in the sector and the element that covers the  G.D.P of India.

Before I start, let me describe as to what is G.D.P This can be plainly dexcribed as - ::

“ Gross domestic product (GDP) ” is the most common measure for the size of an economy, and it measures the value of total final output of goods and services produced by that economy in a certain period of time ”.

In the following article below, the students of various competitive exams can know about the biggest industrial contributor in the Indian GDP, the sectors that have the maximum potential to contribute and much more. Take a look at the tables in the article to know more .

G.D.P of India- It Is Totally Hinged Upon The Contribution Each States Makes - ::

The G.D.P of India is completely based on the various states and the Union Territories make all throught the year. Every state has a kind or some kind of natural resources. These constitutes the income of the state and through the taxes that the state implies upon it and as the taxes are covered under the Central system of taxation, each states contributes to the Central Government , the taxes that they ought to pay to the Central Government. This is how the country India as a whole makes and generates its revenue in terms of the income it makes nationally every year.

India's GDP is the measure of its economic state. Various sectors have their contribution in it. Take a look below at such contributions and the difference these sectors make due to it in the economy.G.D.P of India- It Is Totally Hinged Upon The Contribution Each States Makes - ::

The G.D.P of India is completely based on the various states and the Union Territories make all throught the year. Every state has a kind or some kind of natural resources. These constitutes the income of the state and through the taxes that the state implies upon it and as the taxes are covered under the Central system of taxation, each states contributes to the Central Government , the taxes that they ought to pay to the Central Government. This is how the country India as a whole makes and generates its revenue in terms of the income it makes nationally every year.

India's GDP is the measure of its economic state. Various sectors have their contribution in it. Take a look below at such contributions and the difference these sectors make due to it in the economy. 

SERVICE SECTOR – THE BIGGEST CONTRIBUTORTO INDIAN G.D.P.> “ CLEAR MALADY ”  

Sector to sector and category to categories, it could be divided amongst each sector and the category for the G.D.P that each sector from every state generates and constitutes in making the national income for India in terms of the revenue it generates.

I shal be describing them all here by taking every sector. In my description I would not boil it down by breaking it into the states about who contributes in that category of that sector, but an overall perspective would make the maladies very clear.

The service sector is the biggest sector of India with the Gross Value Added at current prices as 96.54 lakh crore in 2020-21. Today the service sector accounts for almost 54% of Indian GVA of 179.15 lakh crores. The Industry sector lags behind it with 25.92% contribution and the Agriculture sector is at the third place with 20.19% contribution. 

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In case we calculate at 2011-12 prices, the Agriculture & allied, Industry, and Services sector's composition is 16.38%, 29.34%, and 54.27%, respectively.

Take a look at the division of the service sector and each division's contribution in GDPService Sector Contribution:

Service Sector divisions

% Contribution

Primary (comprising agriculture, forestry, fishing, and mining & quarrying)

21.82 percent

Secondary (comprising manufacturing, electricity, gas, water supply etc

24.29 percent

Tertiary (services) sectors

53.89 percent

If we calculate from 1950-51, the share of the services sector has improved to 57.03%. Share of the Industry sector has also increased to 24.77%. 

Contribution to GDP: Sector-wise

At present, the following situation is there in the sector's contribution. View the table below:

Sector

Contribution

Agriculture

20.19%

Service

53.89%

Industry

25.92%

Sector-wise GDP Allocation in India can be viewed from the table below:

Sector

Constant Prices (INR Crores)

Share %

Current Prices (INR Crores)

Share %

Agriculture Sector

2,040,079

16.38 %

3,616,523

20.19 %

Agriculture,forestry & fishing

2,040,079

16.38 %

3,616,523

20.19 %

Industry Sector

3,654,362

29.34 %

4,644,385

25.92 %

Mining & quarrying

294,644

2.37 %

292,120

1.63 %

Manufacturing

2,107,068

16.92 %

2,585,740

14.43 %

Electricity, gas, water supply & other utility services

306,254

2.46 %

484,477

2.70 %

Construction

946,396

7.60 %

1,282,048

7.16 %

Services Sector

6,758,989

54.27 %

9,654,259

53.89 %

Trade, hotels, transport, communication and services related to broadcasting

2,208,388

17.73 %

2,941,477

16.42 %

Financial, real estate & prof servs

2,872,815

23.07 %

3,950,786

22.05 %

Public Administration, defence and other services

1,677,786

13.47 %

2,761,996

15.42 %

In the next table you can see the contribution of various sectors to the GVV of India based on the specific division of Primary, Secondary and Tertiary sectors. Take a look below:

Sectors

Constant Prices (INR) in Crores

Share%

Current Prices (INR) in Crores

Share%

Primary Sector

2334723

18.75 %

3908643

21.82 %

Agriculture,forestry & fishing

2040079

16.38 %

3616523

20.19 %

Mining & quarrying

294644

2.37 %

292120

1.63 %

Secondary Sector

3359718

26.98 %

4352265

24.29 %

Manufacturing

2107068

16.92 %

2585740

14.43 %

Electricity, gas, water supply & other utility services

306254

2.46 %

484477

2.70 %

Construction

946396

7.60 %

1282048

7.16 %

Tertiary Sector

6758989

54.27 %

9654259

53.89 %

Trade, hotels, transport, communication and services related to broadcasting

2208388

17.73 %

2941477

16.42 %

Financial, real estate & prof service

2872815

23.07 %

3950786

22.05 %

Public Administration, defense and other services

1677786

13.47 %

2761996

15.42 %

It is imperative here to mention all about the category of the sectors. I have chosen the  PRIMARY SECTOR, THE SECONDARY SECTOR  and the TERTIARY SECTOR  as the three different sector, each categorizing about the revenue that it generates to the national revenue and income generation of India.

Here to add and make it very clear – the PRIMARY SECTOR constitutes the  MAJOR of the national income followed by the SECONDARY  and then the  TERTIARY  sector.

It is not that there is a RANK that each sector that I have given here but I have in my attempt, have tried to explain the maximum contribution that comes out from that sector, and then the minimum at the minimal that comes out from that sector.

Not that I have made an attempt to devalue any sector but point out the prime contributors and the least contributor 

The Primary Sector consists of agriculture, forestry and fishing while the secondary sector consists of industries like manufacturing, electricity, gas, water and other utility services. Tertiary sector consists of trade, hotels, transport, communication, financial services, real estate etc. 

Under following conditions India can achieve 15-20% growth rate:-

At present India generates at about EIGHT PERCENT of G.D.P per annum. India can double this as well to a minimum of  FIFTEEN PERCENT and  maximum of about   TWENTY PERCENT .This might really spark many an eye brow , but I have explained here about how it could be achieved.

The  SOCIOLOGICAL  and the  FINANCIAL  expedition could be done by the Government of India and if they could do that , this nation could achieve the impossible. Well how to achieve it sociologically, I visualise the following points which could act as and make it extremely possible and it is NOT a hard task.If the Government of India rigorously does its expedition and the homework well, it could achieve the impossible. 

Here are the points 

1 We improve law and order situation and peace and harmony in society. Separate religion from politics. Treat all religions equal.

2. Stop free schemes which are waste of national resources and spread corruption at all levels. Spend money on creation of real and tangible productive useful assets for public.

3. Simplify tax structure, reduce tax rate and compliance process. Maximum individual income tax should not be more than 15%

4. Implement population policy by fixing small family norms for all by providing incentives for small family and disincentives for large one. Without this nothing can be achieved.

5.We commit to solve the problem with neighbors through dialogue, diplomacy and consultations. It is very difficult but this is only way. war does not solve any problem. This will enable us to invest in productive activities.

.6. We revive Panning Commission for ensuring planned development and avoid launching of adhoc schemes ,have consultation with oppositions and professional experts for framing policies and schemes.

7. Resources generated though disinvestment, Privatization and monetization of public assets be spent only on creation of new public assets, infrastructures for education and health sector and not spent on revenue expenditure.

8. We respect and ensure separation of powers among pillars of democracy i.e. Legislative, Executive, Judiciary and Media/Press .

9. We have Election Chief Commissioner like Mr. T.R. Seshan for free and fair election. This will ensure that leaders are elected based on performance and not false promises and misuse of money and public fund.

10. We should have leaders who speak truth, are honest, well educated, are strong and have good leadership qualities.

11.We as voters and citizens perform our duties carefully and exercise our rights judiciously.

With above measure India can achieve 15-20% growth rate.


Pic - :: The Actual Table Of The Growth Of India And Her G.D.P from 1996 - to 2019 
Here in this table I have taken the figures from the year 1996 to the year 2019 when the Modi Government 2.0 was in power. The figure would reveal all about the CONSISTENT level of  G.D.P and the growth that the Modi Government achieved and the fall that it had in the year 2018 and the year 2019.

The main reason for the downfall in the G.D.P in the year 2018 and 2019 was that the manufacturing sector and the changing banking policy made the things impossible for the Government of India to achieve its feat.

Many of the bank were clubbed with each other and ONE bank took over the other to amalgamate that within themselves and the banking policies took a lot of time for it to actually come to a mainstream of the policy of the banks as laid by the Government.

That hit the manufacturing sector in a large manner and that resulted in the fall of the G.D.P 


IS IT POSSIBLE FOR INDIA TO ACHIEVE THE IMPOSSIBLE OF A FIFTEEN PERCENT G.D.P GROWTH IN THE COMING THREEYEARS-:


I think it is possible but requires a sector-wise analysis of what we need to accomplish.

Agriculture sector

Agriculture contributes to 15% of our GDP. However, it employs close to 50% of our population. This is a classic case of underemployment. We have 86% of small/marginal farmers who cannot deploy the required capital to improve farm mechanization. Also, as generations pass, the land per individual decreases and his income from the land. The average farmer income in India is 80k per year. In contrast, the average salary of an industrial worker is 1.8 lakh/per annum. Even though a farmer’s know-how is better than an industrial worker, the economics doesn’t support him. Clearly, we need to bring down the population working in the agriculture sector to 20–30% in the next decade and simultaneously increase the output through farm mechanization. The three farm laws are a step towards reforms in agriculture, lets see what else can be done:

Reforms

  • Allow 100% FDI in retail, without any restrictions, this improves competition, dismantles middlemen network also improves supply chain infrastructure.
  • Encourage crop diversity by giving export subsidies to crops like pulses, oil seeds, maize, corn etc.
  • Also, instead of subsidizing farmer electricity usage, subsidize solar power with one time investment to solve a permanent problem.
  • India’s macroeconomic policies are designed to curtail inflation, whenever food prices rise, import duties are reduced and hence output prices are fixed but input prices like fertilizers, seeds, electricity, pesticides rise causing an income stagnation for farmers. This is a clear policy mistake which needs to be corrected even at the cost of having food prices inflation.
  • Use funds allocated to MGNREGA program to build cold-storage infrastruture, rural all-whether roads, wells etc. This scheme should be implemented properly so that labour should not be diverted from actual agriculture work.
  • Focus on export-led growth of diary products, sea-foods is imperative because we have a huge diary industry and coast line. India can extend PLI scheme into export of processed meat and sea food sector which has huge market in US and Europe.

Manufacturing sector

We all know that India has historically underpeformed in Manufacturing sector. The share of manufacturing in India’s GDP dropped from 30% in 2014 to 27.5 in 2020. All great economies like China, South Korea, Japan, Germany have focused on manufacturing industry in their high-growth phase because this sector has a capacity to generate jobs across all strata in the society. They form a prime alternative for agriculture labour and small/marginal farmers to shift to urban areas and climb up the socio-economic ladder.

India has only a few successes in manufacturing.

Automobiles : Maruti, Mahindra & Mahindra, Hero, Tata etc. Also, foreign firms like Hyundai-Kia, Toyota manufacture in India.

PharmaceuticalsSun Pharmaceuticals, Dr Reddy’s labs, Divi’s lab, Cipla etc.

FMCGHUL, Nestle India, ITC, Dabur, Marico etc

Consumer DurablesWhirlpool India, Voltas ltd, Blue star, Crompton Greaves etc.

Textiles & ApparelAravind Ltd, Page Industries, Raymond, Vardhaman textiles.

However, even in most of the above industries we import 30–50% of raw materials from China and South-east Asia. There is a lot to be done here.

Reforms:

  • Mature value chains must scale up:
    • Government’s PLI sheme must help sectors like pharmaceuticals, automobiles to scale up and localize their entire supply-chains. This makes them export-competitive and improves their margins and global footprint.
  • Established but underweight value chains must transform:
    • Aerospace and defense sectors need a lot of foreign technological investments to scale up to global standards. Here, large manufacturers will need to strengthen their capabilities along with their smaller supplier capabilities. FDI is the only way forward to reach the full export potential in this segment.
    • Food processing industries like Amul, Nestle, ITC should be focussing on building on global brands and export-led growth.
  • Emerging value chains that must seed
    • India did not invest in sun-rise sectors like semiconductors, solar panels. India needs to give huge incentives to electronics manufacturing companies to shift their production base to India. Already Iphone, Samsung, Xiaomi assemble final devices in India. This shoiuld be extended to Printed circuit Boards(PCB), mobile accessories, Laptops, IoT devices etc. Also India can heavily invest in EVs, Wind & Solar energy, Hydrogen fuel cells, Lithium-ion batteries to compete with low-cost products emerging from China.
  • Policy changes:
    • Privatise all loss making PSUs in steel, power, coal, electrical machines etc. This unlocks the value of PSU firms and leads them in the profibiltability path. Government can retain minority stakes to receive dividends and also receive income in the form of taxes on profit. Nobody loses the job and everyone can be profitable.
    • India has demographics but not skills. Investments must be made in reskilling and upskilling of population in digital technology led manufacturing industies.
    • Increase infrastrure spending in highways, railways and urban transport which directly impacts FDI growth and also addresses supply side contraints.
    • Increase the number of Special Economic Zone (SEZ) in India. China has 10 times more SEZs compared to India.
    • Natural resources like coal, iron ores, bauxite ores should be deregulated thereby reducing input costs for manufacturing.

Service sector

India has an excellent record in service sector. Its share is GDP is 55% and employs a quarter of our population. India’s success in IT industry is impeccable. However, there is more to serivice sector than IT. For example, we have Banking, Financial services and Insurance (BFSI), Tourism and hospitality, Transportation, Healthcare, Education etc. Eventough service sector is growing at an avg of 8%, we have significant room to improvemts.

Reforms:

  • Government should exit banking sector to a significant extent. Govt managed financial entities are slow, corrupt and hinder free credit flow. Also, they are used for all government pet projects like low-interest loans, loan waivers, loans for dying PSUs etc.
  • Tourism and hospitatlity is the most underrated industry in India. Yet it employs more than 7% population. So, India should allow FDI here to increase tourism infrastructure. Also foreign tourists should be encouraged through multiple incentives and special Visa packages. In addition to spiritual tourism, we should market the huge ecological and biodiversity of India.
  • Healthcare is also a very great sector for income generation. India is famous for low-cost, high-efficiency medical treatment in the world. However, we only receive patients from few nations. India should give incentives to its corporate hospitals to improve medical infrastructure and also give low-cost visas to medical tourists. India can also improve its doctor count, tertiary health care spending, to reduce the overall out of the pocket expenditure for the Indian patients.
  • In Transportation, India should heavily invest in public transport infrasture like Metro trains, Electric buses etc. Usually, a nation’s development hinges on the effeiciency of its public transport infrastructure. India has only 760 km of metro trains operational, only Shanghai has 743 kms of metro trains operational. Also, India should invest in semi-high speed trains like Vande Bharat express, shatabdi express etc.1 We improve law and order situation and peace and harmony in society. Separate religion from politics. Treat all religions equal.
  • IMPORTANT STEP AS A CITIZEN OF INDIA AND MOST IMPORTANT STEPS OUGHT TO BE TAKEN BY POLITICIANS TO ACHIEVE THIS IMPOSSIBLE


  • There are many and many steps that could be put forward by the  BEST OF THE ECONOMIST. However I have tried to be very COMMON and very EASY for the nation and by explaining it to the people beside the UNSCRUPULOUS Government POLITICIANS as well as the bureaucrats about how it could be achieved.

1 We improve law and order situation and peace and harmony in society. Separate religion from politics. Treat all religions equal.

2. Stop free schemes which are waste of national resources and spread corruption at all levels. Spend money on creation of real and tangible productive useful assets for public.

3. Simplify tax structure, reduce tax rate and compliance process. Maximum individual income tax should not be more than 15%

4. Implement population policy by fixing small family norms for all by providing incentives for small family and disincentives for large one. Without this nothing can be achieved.

5.We commit to solve the problem with neighbors through dialogue, diplomacy and consultations. It is very difficult but this is only way. war does not solve any problem. This will enable us to invest in productive activities.

.6. We revive Panning Commission for ensuring planned development and avoid launching of adhoc schemes ,have consultation with oppositions and professional experts for framing policies and schemes.

7. Resources generated though disinvestment, Privatization and monetization of public assets be spent only on creation of new public assets, infrastructures for education and health sector and not spent on revenue expenditure.

8. We respect and ensure separation of powers among pillars of democracy i.e. Legislative, Executive, Judiciary and Media/Press .

9. We have had  Election Chief Commissioner like Mr. T.R. Seshan who advocated  for free and fair election. This will ensure that leaders are elected based on performance and not false promises and misuse of money and public fund.

10. We should have leaders who speak truth, are honest, well educated, are strong and have good leadership qualities.

11.We as voters and citizens perform our duties carefully and exercise our rights judiciously.

With above measure India can achieve 15-20% growth rate.

Jai Bharat

That Is It and that speaks all about it 

.Regards and Thanks
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Mr Shyamal Bhattacharjee, the author was born at West Chirimiri Colliery at District Surguja, Chattisgarh on July 6th 1959 He received his early education at Carmel Convent School Bishrampur and later at Christ Church Boys' Higher Secondary School at Jabalpur. He later joined Hislop College at Nagpur and completed his graduation in Science and he also added a degree in  B A thereafter. He joined the HITAVADA, a leading dailies of Central India at Nagpur as a      Sub-Editor ( Sports ) but gave up to complete his MBA in 1984 He thereafter added a Diploma In Export Management. He has authored SEVEN   books namely Notable Quotes and Noble Thought published by Pustak Mahal in 2001 Indian Cricket : Faces That Changed It  published by Manas Publications in 2009 and Essential Of Office Management published by NBCA, Kolkatta  in 2012, GOLDEN QUOTES on INSPIRATION , SORROW , PEACE and LIFE published by B.F.C Publications, Lucknow, , and QUOTES:: Evolution and Origin of Management Electives by Clever Fox Publishing, Chennai ,From Dhyan To Dhan :: Indian Hockey - Sudden Death Or Extra Time published by   BOOKS CLINIC  Publishing House , Bilaspur , Chattisgarh and his FIRST book on Hindi poem, which reads as  " BHED HAI GEHRA - BAAT JARA SI  published by Books Clinics , Bilaspur , Chhattisgarh. He has a experience of about 35 years in Marketing , and Business Analytics .


Signature Of Shyamal Bhattacharjee

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