Core Sectors - UPSC Economy Notes

Core sectors of an economy are the main or the key industries in the economy. In India, 8 sectors are considered the Core Sectors. In this article,  you can read all about the Eight Core Sectors of the Indian Economy for the IAS exam.

Indian Economy is an important subject of the UPSC 2021. Complement your  Economy preparation with the following links:

  1. Economy Notes for UPSC
  2. Indian Economy Questions from UPSC Mains GS 3
  3. Important Economic Terms Related to Union Budget
  4. UPSC Mains GS 3 Syllabus, Structure and Strategy

Core Sectors of the Indian Economy

The eight-core sectors of the Indian economy are:

  1. Electricity
  2. Steel
  3. Refinery products
  4. Crude oil
  5. Coal
  6. Cement
  7. Natural gas
  8. Fertilizers

These industries have a major impact on general economic activities and also industrial activities. They significantly impact most other industries as well. The core sector represents the capital base of the economy.

These eight industries have a combined share of above 40% in the Index of Industrial Production (IIP).

The IIP gives the growth rates of different industry groups of the economy over a specified period.

Read more on the IIP at the linked article.

Weight of Core Industries in IIP

The weight of the different core sectors in the Index of Industrial Production is given in the table below.

Industry Weight
Coal 10.33
Electricity 19.85
Crude oil 8.98
Cement 5.37
Natural gas 6.88
Steel 17.92
Refinery products 28.04
Fertilizers 2.63
Total 100

Also, read about CPI and WPI from th links provided below:

  1. Consumer Price Index (CPI)
  2. Wholesale Price Index (WPI)

Index of Eight Core Industries (ICI)

The ICI is a production volume index prepared and released by the Office of the Economic Adviser (OEA), Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce & Industry, GOI.

  • It is released 12 days before the IIP is released.
  • The objective of the Index of Eight Core Industries is to give an advance indication on the production performance of the industries which are of ‘core’ nature before the release of the IIP.
  • The ICI measures the individual and collective performances of the production in these eight core industries.
  • The ICI is used by policymakers including the Ministry of Finance, other Ministries, and Departments.
  • It is also used by banks for financing infrastructure projects and the Reserve Bank of India (RBI).
  • To calculate the ICI, the components covered under the eight core sectors are mentioned in the table below:
    • Coal – Coal Production excluding Coking coal.
    • Electricity – Actual Electricity Generation of Thermal, Nuclear, Hydro, imports from Bhutan.
    • Crude Oil – Total Crude Oil Production.
    • Cement – Production of Large Plants and Mini Plants.
    • Natural Gas – Total Natural Gas Production.
    • Steel – Production of Alloy and Non-Alloy Steel only.
    • Refinery Products – Total Refinery Production (in terms of Crude Throughput).
    • Fertilizer – Urea, Ammonium Sulphate (A/S), Calcium Ammonium Nitrate (CAN), Ammonium chloride (A/C), Diammonium Phosphate (DAP), Complex Grade Fertilizer and Single superphosphate (SSP).
  • The ICI is released every month. The index is calculated by using the Laspeyres formula of the weighted arithmetic mean of quantity relatives.

Core Sectors – Indian Economy:- Download PDF Here

Frequently Asked Questions about Core Sectors

Which sector is the backbone of Indian economy?

The MSME sector is regarded as the backbone of the Indian economy. It churns out over 6000 products which are highly sought after across the global marketplaces. It employs 40% of the country’s workforce, next only to the agricultural sector. Contributing 45% to manufacturing output, the MSME employs around 120 million people. The absence of effective marketing tools and techniques is often regarded as the key impediments hurting the sector.The sector has the potential to spread industrial growth across the country. According to Directorate General of Commercial Intelligence and Statistics (DGCIS), the share of MSME related products in total export from India during 2018-19 stood at 48.10%.

What comes under the services sector in India?

India’s services sector covers a wide variety of activities such as trade, hotel and restaurants, transport, storage and communication, financing, insurance, real estate, business services, community, social and personal services, and services associated with construction.The services sector is a key driver of India’s economic growth. The sector contributed 55.39 per cent to India’s Gross Value Added at current price in FY20. Services sector’s GVA grew at a CAGR of 1.45 per cent to US$ 1,064.8 billion in FY20 from US$ 1,005 billion in FY16. Net export estimate in FY20 from services stood at US$ 214.14 billion, while import was at US$ 131.41 billion in FY20.Services sector is the largest recipient of FDI in India with inflow of US$ 82 billion between April 2000 and March 2020.

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