Industry, Infrastructure and Services
Industry transforms raw materials, infrastructure supports production and daily life, and services provide intangible outputs. This domain tests industrial classification, MSMEs, public and private sectors, industrial policy, economic and social infrastructure, and the growing role of services in India and Karnataka.
Core rules and concepts
- Industrial classification: primary (extraction), secondary (manufacturing) and tertiary (services). Industries may be heavy or light, cottage or factory, public or private.
- MSMEs are micro, small and medium enterprises judged by investment and turnover; they create jobs and support large firms.
- Industrial policy: India moved from licensing and protection before 1991 to liberalisation, privatisation and globalisation.
- Infrastructure: economic infrastructure includes power, transport, communication and water; social infrastructure includes education and health.
- Services: banking, trade, transport, tourism, IT and education; they are intangible and often need direct contact.
- Karnataka: Bengaluru's IT and biotechnology clusters, automotive and aerospace units, textiles, silk and tourism are important.
Worked example
A garment firm has output worth ₹50 lakh and buys fabric, thread and electricity worth ₹30 lakh. Value added = output - intermediate consumption = 50 - 30 = ₹20 lakh. If it buys new sewing machines worth ₹5 lakh, that is capital formation, not intermediate consumption, because machines are used over several years. Counting the ₹30 lakh inputs again as output would double-count and overstate national income.
Traps that cost marks
Services are the largest contributor to GDP, but agriculture still employs the largest share of workers. Infrastructure is not only roads and power; schools and hospitals are social infrastructure. MSMEs are not merely tiny shops; they include modern small manufacturers. Intermediate goods are not counted in final output.