Question

What is the direction of changing in the importance of different sector in regard to gdp in india

Answer 1

GDP is a very strong measure to gauge the economic health of a country
and it reflects the sum total of the production of a country and as such
comprises all purchases of goods and services produced by a country and
services used by individuals, firms, foreigners and the governing bodies.
It is used as an indicator by almost all the governments and economic
decision-makers for planning and policy formulation. It enables one
to judge whether the economy is contracting or expanding, whether it
needs a boost or restraint, and if a threat such as a recession or inflation
looms on the horizon. When government officials plan for the future,
they consider the various economic sectors’ contribution to the GDP.
GDP was first developed by Simon Kuznets for a US Congress report
in 1934. The volume of GDP is the sum of value added, measured at
constant prices, by households, government, and industries operating in
the economy. GDP accounts for all domestic production, regardless of
whether the income accrues to domestic or foreign institutions.
The Organization for Economic Cooperation and Development (OECD),
in a report released in November 2012, has also forecasted major
shifts in global GDP by the year 2060. The report said that based on
2005 purchasing power parity (PPP) values, India is expected to overtake
the U.S. economy to become the second-biggest in 2051. The report also
forecasts that the combined GDP of China and India will exceed that of
the combined G-7 nations (the world’s richest economies) by 2025, and
be 1.5 times larger by 2060 (Picardo, 2013).
The Gross Domestic Product in the country like India is experiencing a
faster rate of growth in the recent years. With regards to the composition
of GDP, the percentage shares of various sectors have largely changed. The
percentage share of the agriculture in the total GDP has declined, on the
contrary the percentage share of services in the GDP is rising faster. With
this shift, the Indian economy which was considered, by and large, to be
agriculture based economy but with the opening up of the economy post
economic reforms of 1991, has become predominantly services-based with
services accounting for 44.60% of the GDP and employing 35.70% of
the population whereas agriculture accounts for 17.39% of GDP and
employs 47.20% of the population and manufacturing and industry
accounting for 25.75% of GDP and employing 24.70% of the population.

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