Changes in the Occupational structure of

India
• occupational structure of a country refers to the division of its work force engaged in different
economic activities.
• Changes in occupational structure are associated with economic development.
• The rate of economic development and the level of per capita income increase as more and more
work force shifts from primary sector to secondary and tertiary sector.
• Many economists and theories of development have pointed to this relationship between changing
occupational structure and economic development
• A.G.B. Fisher writes, “We may say that in every progressive economy there has been a
steady shift of employment and investment from the essential ‘Primary
activities’…………………………… to secondary activities of all kinds and to a still greater
extent into tertiary production.”
• Colin Clark observes, “A high average level of real income per head is always associated
with a high proportion of working population engaged in tertiary industries low real
income per head is always associated with a low proportion of the working population
engaged in tertiary production and a high percentage in primary production.”
Continued …
• Thus to attain a high rate of economic development inter-sectoral transfer of work force is very
much necessary
• he extent and pace of inter-sectoral transfer of work force depend very much on the rate of increase
in productivity in the primary sector in relation to other sectors.
Let us examine the Occupational structure of India over the last few decades and
analyze the trends.
The Trends in the changing occupational structure
• We can observe the following important aspects about the changing occupational structure:
1. Predominance of agriculture and allied activities in employment : This shows that agriculture continues
to absorb a large section of workforce, it has low productivity and constitutes disguised unemployment
2. Fall in the share of agriculture and allied services : Though agriculture contributes more in the
absolute numbers, there has been a reduction in the number of people engaged in it over time.
3. Increase in the share of secondary sector in employment : The share of workforce in this sector is
steadily rising, specially in the manufacturing sector – ( which includes consumer goods industries
and SME’s ) and construction sector – ( which is highly labour intensive )
4. Increase in the share of the service sector : in the period between 1991- 2001 and onwards, this
sector saw the fastest labour absorption due to the availability of the low cost, skilled and English
speaking labour pool. The IT-enabled services, telecom sectors, banking and finance have increased
the employment substantially.
5. Shift in the occupational pattern since 1991 : Prior to 1991, the occupational pattern was not
showing any marked changes. It changed decisively post the reform period with a clear opening of
the Indian economy.
6. Changes in the Occupational structure of the states : Some states like Kerela, Maharashtra etc have
witnessed a rapid shift in the pattern of workforce distribution.
 Continued …
7. Increased growth of the unorganised sector : The share of organised sector employment increased from 13
% to 17.3% between 2004-05 and 2011-12 where as the share of unorganised sector for the same period
dropped from 87% to 82%. This shows that unorganised sector employment is far more than organised
sector.
8. Informalisation of Labour : Within the unorganised sector, the informal sector has grown overtime. It
shows, that the nature of employment is changing fast and becoming loose in terms of job security.
9. Feminization of labour in low wage jobs : The proportion of women in the work force has increased in the
reform period but a bulk of these are seen in the informal sector jobs with labour intensive, low skill
industries.

To Conclude :
The occupational structure in India has undergone the change with the rise in growth of the economy. Some of
these changes are favourable and encouraging while some are not. There is s considerable increase in the
unorganised and inform employment as a result of globalisation and post reform changes.
Links
• https://www.economicsdiscussion.net/india/occupational-structure-
in-india-an-overview/19135
Changes in the Sectoral Composition of National
Income
❖ The sectoral composition of national income shows the share of each sector in its contribution to the
national income
❖ It is also known as the Gross value added by the different sectors
❖ Many economic models have explained growth in terms of the changes in the sectoral contribution to the
GDP, some of them are – Kuznet - Clark thesis, Chenery
❖ The different sectors are grouped under three categories : Agriculture, Manufacturing, Services.
❖ A shift in the contributions of each sector giving way to the other, is considered as a natural indicator of
development.

Vaidehi Dhamankar
Changing sectoral
composition – (1950 –
2012).

Vaidehi Dhamankar
Sectoral composition with the sub sectors

Vaidehi Dhamankar
Changes in the Sectoral Composition
We observe the following changes in India’s sectoral composition
1. Declining share of Agriculture and Allied activities : The sub sectors here include agriculture, forestry, fishing and mining. Of these,
agriculture contributes the most. The total share of the primary sector in the GVA has declined from 56.1% to 16.5%. This drop is due to
the following reasons:
• Falling investment in agriculture, low productivity, distorted incentive system
• Erratic rainfall
• Increased growth rate of other sectors
• Increased spending on manufactured goods over wage goods, as the economy grows.
2. Rising share of the industry : The sub sectors include construction, manufacturing, electricity. This sector has contributed very modestly
in India specially in the post reform period. Manufacturing being the largest sub sector. The laggard growth in this sector can be
attributed to :
• Increased cost of inputs like crude and energy sources
• Stronger state control of industries prior to the reforms
• Low competitiveness of the industry due to various factors.
3. Increasing share of the service sector : The sub sectors include trade, hotel and transport, finance, insurance, public administration a
and defence. This sector in India has shown rapid growth over the years. It is the main driver of the national income. Some of the
factors responsible for this sector’s growth are :
• Increased scope for services post 1991
• Availability of young, employable and English speaking labour force

Vaidehi Dhamankar
Continued ….
• Increased growth of the physical and social infrastructure in the post reform period
• Increased average per capita incomes and population growth necessitating the need for newer services.
• Growth and maturing of the financial markets in India.

The table shows the growth of the sub sectors in the services which have registered a growth :

Vaidehi Dhamankar
Sub sectors in the services
1. Share of trade, hotels and transports has increased from 11% to 26.7% between 1950-51 to 2011-12.
2. Share of finance, real estate and business services increased from 8.3 % to 18 % between 1950-51 to
2011-12
3. Share of public administration and other services grew marginally from 10.2% to 12.7% between the
same period.

To Conclude :
India’s sectoral composition has changed slowly, with the transition from the dominance of agriculture to
that of manufacturing and then the services.
However, India’s manufacturing sector has not grown in comparison to many other developing countries.

Vaidehi Dhamankar
Links
• https://www.economicsdiscussion.net/essays/national-income-
essays/essay-on-the-national-income-of-india/17605
• https://www.businesstoday.in/current/economy-politics/govt-aims-
to-boost-manufacturing-share-in-gdp-to-20-by-2025--defence-
pharma-to-be-key-areas/story/410254.html

Thank you ☺

Vaidehi Dhamankar