Name: The Public and Private Sectors in India
Uploaded: 2019-07-19
Duration: 4 min 2 s
Description: Based on the ownership and nature of economic activities, sectors are classified into public and private sectors. Learn more about them in this video.

Question

How do we count the various goods and services and know the total production in each sector?

Accepted Answer

The production of goods and services carried out by all three economic sectors is known by the way of calculation of GDP. GDP involves the value additions of all economic sectors. In an economy, there are three economic sectors which are the primary sector, secondary sector, and tertiary sector. The GDP level accounts for the total amounts of goods and services that all economic sectors produce within a year. The GDP levels of different nations are compared to distinguish the economic status of all countries. GDP levels are always counted in the monetary measures.

The overall functioning of an economy can be better known with the help of GDP levels. The contribution made by the primary sector involves the monetary receipts generated from agricultural practices. The GDP contribution devoted by the secondary sector involves the generation of monetary receipts from industrial production. And the GDP contribution strived by the tertiary sector involves the profit generation with the help of services such as banking, insurance, and so on.

In order to calculate the GDP levels, the market values of final goods and services are only included in an economy. The value of intermediate goods is not included in GDP. The final goods are accounted for only to mitigate the problem of double counting. Double counting involves the calculation of one commodity more than one time. If the intermediate and final goods are included in an economy, then the value of final goods already includes the values of intermediate goods. While the separate addition of intermediate goods leads to the over-estimation of GDP. Hence, the values of intermediate goods are ignored in estimating GDP.

How do we count the various goods and services and know the total production in each sector?

Important Questions on Sectors of the Indian Economy

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