The primary sector employs around 50% of the population, but it contributes the most to disguised unemployment. Even when people appear to be employed, they are actually unemployed as their removal from the production process does not affect the said process. These people are engaged in activities but not to their full potential. This situation is called disguised unemployment or hidden unemployment.

It is present in both rural and urban areas. In rural areas, disguised unemployment is present in the agricultural sector. Owing to the family structure in India, several members of the same family may be working on the same piece of land for agricultural production. They are engaged in an activity which can be carried out by lesser number of people as rural land holdings in India are notoriously small. Thus, they are not employed to their full potential and contributing towards disguised unemployment.

As per 2015 estimates, agriculture contributes 16.1%, industry 29.5% and service sector 54.4% of GDP of the country. Agriculture sector’s contribution to the national income is lowest due to seasonal nature of it.