Contribution of different sectors in the GDP is also an indicator of about Indian economy. A larger share of the agriculture and the primary sector indicates a predominance of agricultural economy and low level of industrialization. At the time of independence, Indian economy was predominantly agrarian. In 1951-52, primary sector including agriculture, forestry, logging and fishing contributed for 54.56% of the economy while manufacturing and other activities provided for 16.11% of the GDP. Transport and communication provided for 10.31%, financial services 10.16% and other services an 8.87% share in the GDP. In 1989-90, the share of primary sector including agriculture reduced to 32.23% which meant a 22.33% reduction in about 40 years. This is because of the peculiar geography of India
Corresponding increase was seen in the manufacturing sector which provided for 27.21% of the GDP and exhibited an increase of 16.9%. Transport, communication and trade which provided for 18.13% of the GDP also showed an increase of 7.82%. Share of the financial sector showed a marginal decline from 10.16% to 10.08%. This could have been due to the excessive state control of this sector in the form of the nationalization of banks and general insurance. In initial years the sectors had shown signs of improvement, its share in GDP increasing and having an average of about 12% in the second plan period declining marginally to 11.56% in third plan period. However, since then it started declining and remained well below 10% and in some years below 9%, upto the sixth plan period showing an improvement in the seventh plan period. Other services which included community, social and personal services contributed 12.35% to the GDP in 1989-90 thereby registering an increase of 3.48%.
National Income is defined as the sum total of all the goods and services produced in a country. Like GDP it is calculated annually. Alfred Marshall defines National income as “The labour and capital of a country, acting on its natural resources, produce annually a certain net aggregate of commodities, material and immaterial, including services of all kinds…..and net income due on account of foreign investments must be added in. This is the true net National income or Revenue of the country or the national dividend.” Irving Fisher defined national income as “The national dividend or income consists solely of services as received by the ultimate consumers, whether from their material or from human environments. Thus, a piano or an overcoat made for me this year is not a part of this year’s income, but an addition to capital, and gives information of history about India. Only the services rendered to me during this year by these things are income.” Central Statistical Organization defines National income as “National Income is the sum of factor income earned by the normal residents of a country in the form of wages, rent, interest and profit in an accounting year.” Concept of National income is related to GPD as National income is GDP plus income from abroad. Per capita income is obtained by dividing the national income by the population. As GDP forms an important component of the national income, national income also fluctuates in conditions resulting in GDP fluctuations.