2.3.1. Rising Importance of the Tertiary Sector in Production

Over the forty years between 1973-74 and 2013-14, while production in all the three sectors has increased, it has increased the most in the tertiary sector. As a result, in the year 2013-14, the tertiary sector has emerged as the largest producing sector in India replacing the primary sector.

From 1973 to 2014, the production in India saw a significant shift towards the tertiary sector, which includes services like healthcare, education, and banking. The data indicates that while all sectors grew, the tertiary sector's growth was the most pronounced, ultimately making it the primary contributor to India's economy, overtaking agriculture. This marks a fundamental change in economic structures as societies evolve and develop.

Consider a growing city like Bengaluru in India. As its tech industry flourished, many people shifted from agriculture and manufacturing jobs to roles in IT services, healthcare, and education, showcasing a direct reflection of the shift towards the tertiary sector.

Why is the tertiary sector becoming so important in India? There could be several reasons. First, in any country several services such as hospitals, educational institutions, post and telegraph services, police stations, courts, village administrative offices, municipal corporations, defence, transport, banks, insurance companies, etc. are required. These can be considered as basic services. In a developing country the government has to take responsibility for the provision of these services.

The rise in importance of the tertiary sector can be attributed to the increasing demand for essential services by the population. As a country develops, citizens require better healthcare, education, and various administrative services, which the government often provides. This aspect not only addresses basic needs but also establishes a foundation for continuous development in other sectors.

Imagine trying to run a successful business without reliable access to a bank, transport for deliveries, or educated employees. As more people require services that support their daily lives and businesses, the sector handling these, i.e., tertiary, grows in priority.

Second, the development of agriculture and industry leads to the development of services such as transport, trade, storage and the like, as we have already seen. Greater the development of the primary and secondary sectors, more would be the demand for such services.

As agriculture and industry improve and produce more goods, there is a corresponding increase in the demand for services that facilitate these activities. This includes logistics for transporting goods, storage facilities to keep them until they are sold, and trade services that connect producers with consumers.

Consider how farmers growing more vegetables will need trucks to transport their produce to markets. The increased farming activity boosts demand for transport services, interlinking agriculture's growth with the need for tertiary sector jobs.

Third, as income levels rise, certain sections of people start demanding many more services like eating out, tourism, shopping, private hospitals, private schools, professional training etc. You can see this change quite sharply in cities, especially in big cities.

With increasing income levels, people prefer to spend on services that enhance their quality of life, such as dining out, entertainment, and personal healthcare. This shift in consumer behavior illustrates a growing middle class that prioritizes spending on services rather than basic needs alone.

Think about urban families that enjoy ordering food through apps or financially supporting their children's education in private schools; such behavior is common in cities with rapidly rising incomes, fueling the growth of the tertiary sector.

Fourth, over the past decade or so, certain new services such as those based on information and communication technology have become important and essential. The production of these services has been rising rapidly.

Technology has transformed the service sector dramatically, enabling the rapid growth of IT services, e-commerce, and digital communication. These sectors not only generate substantial employment but also add significant value to the economy.

Consider the rise of startups in areas like app development and online education portals. These modern tech-driven services exemplify how the tertiary sector adapts and thrives in response to technological advancements.

However, you must remember that not all of the service sector is growing equally well. Service sector in India employs many different kinds of people. At one end there are a limited number of services that employ highly skilled and educated workers. At the other end, there are a very large number of workers engaged in services such as small shopkeepers, repair persons, transport persons, etc.

While some tertiary sector jobs demand high education and skill levels, others are low-paying and lack job security. This disparity creates a divide within the workforce, highlighting the need for policies that encourage skill development and equitable growth across the sector.

An example is the contrast between a professional working in a multinational company versus a street vendor. The former likely enjoys better pay and job security while the latter may struggle to make ends meet despite their contributions.

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