CHAPTER -2

SECTORS OF THE INDIAN ECONOMY

CONTENTS:

 Mind map
 Sectors of economic activities
 Comparing the three sectors
 Rising Importance of Tertiary sector
 How to create more employment
 Organized and unorganized sectors
 How to protect workers in unorganized sector
 Public and private sectors

Mind Map:-
Que- differentiate between economic and non-economic activities.

Economic activities Non-Economic activities

These activities give an income in return These activities donot give any income in
return
These are done to earn a livelihood These are done out of compassion, love and
care
e.g.-people going for work in factories, firms, e.g.- doing social work, helping the poor, going
banks, hospitals ,schools etc. to temple

 Division of sector on the basis of Nature of activities:-

Differentiate between Primary sector , Secondary sector and Tertiary sector

Basis of difference Primary sector Secondary sector Tertiary sector

Meaning Primary sector includes It covers the activities in It covers the services
the activities that are which natural resources that help in the
directly related with the are converted into development of primary
natural resources. finished goods by way and secondary sector.
of manufacturing.

Other names It is also called It is also called It is also called service

agriculture sector industrial sector sector.

Examples Agriculture, fisheries , Industries and Transportation, banking,

dairy farming manufacturing units insurance etc.
Que- Classifying the following occupation under primary ,secondary and tertiary sector

Washerman, Diary, fishing, sugar factory, ATM booth

Ans- Primary- dairy ,fishing

Secondary-sugar factory

Tertiary –washerman, ATM booths

Que- P-21-Let’swork these out q-3

Que- Name the sector that is the largest employer in India. Why does this sector produce only a
quarter of the GDP? (CBSE-2012)

Ans- The primary sector is the largest employer in India. About 51% of the total population is
engaged in primary sector but it contributes to 17% of the country’s GDP.

Comparing the three sectors-

Final goods - These goods which finally reach the consumers at their end.

Goods- All those material products that command a price.

Intermediate goods- are those goods that are used up in the production of other goods.

GDP- (Gross domestic product)- It is the sum total of money value of all final goods and

services produced in the economy during a year.

GDP= Production in primary sector + Production in secondary sector + Production in tertiary

Sector

 We include only final gods and services not intermediate goods because if we include
intermediate goods ,it will result in double counting.
 In India GDP is measured by a central government ministry.
 This ministry with the help of various govt. departments of all the Indian states and UT’s
collect information relating to total volume of goods and services and their prices and
then estimates the GDP.

Historical change in the sectors –

Agricultural economy Industrial economy Commercial economy

P-24 Lets work these out

Rising Importance of Tertiary sector in production.
Or

Que- What do you think could be the reason for the rapid growth of the service sector in India.

1. As the country developed , several basic services such as hospitals ,police stations,
courts, banks, educational institutions etc. were bound to grow.
2. With a rise in income level, demand for services like private hospitals ,private schools,
malls, restaurants etc. also witnessed a growth.
3. Over the past decade, demand for new services based on information and communication
technology has increased.
4. Development in the other two sectors –agriculture and industry- has also led to an incrase
in services such as trade, transportation, storage etc.

Unemployment :

When the person is willing to work at the prevailing wage rate but he/she is not getting a job it is
called unemployment.

Types of Unemployment :

1. Seasonal unemployment
2. Disguised unemployment

Seasonal Unemployment : The unemployment which generates due to the variation in season is
called seasonal unemployment. It is mostly seen in agricultural sector.

Disguised Unemployment : When more people are working than its requirement then it is called
disguised unemployment. So, even if we remove few people from the job, the process of
production will not be affected, it is also called underemployment.

Distinguish between Open unemployment and Disguised unemployment-

Basis Open unemployment Disguised unemployment

Meaning When a person has no job in When more people are
hand and does not earn working than its requirement
anything it is called open then it is called disguised
unemployment. unemployment.
Visibility It is clearly visible It is hidden
Existence It is generally found in It is generally found in
Industrial sector agriculture and unorganized
sector.
Examples Laborers of a mill are laid off On an agricultural field the
due to its closure. people are employed more
than the requirement.

How to create more employment:-

OR
Que - Describe the various ways in which govt. can create employment opportunities 5

for the people of India?

1. Provision of infrastructure facilities like irrigation in rural areas-

Construction of dams and canals will generate more jobs. Farmers can grow two or more crops
during a year and they will remain employed throughout the year.

2. Expansion of transport and trade in rural areas-

Building of roads will create new employment opportunities. and ,storehouses will add to the
income of the farmers.

3. Provision of cheap and easy credit facilities. If farmers are provided loans at low rate of interest,
they would be in a position to buy seeds, fertilizers, agricultural equipments etc.

4. Setting up of industries and services in semi rural areas;- These enterprises can provide
employment in those seasons where there is no work on farms.

5. Construction of school buildings health centers etc.- These would not only create more
employment opportunities but also contribute to human development.

6. Promotion of activities like tourism, regional crafts, information etc. can result in creation of
more employment opportunities.

Queue-In what ways can employment be increased in urban areas

1. Rapid industrialization can create massive employment opportunities.

2. Special emphasis should be laid on promotion of labour intensive small scale industries.
3. Adequate arrangements should be made for provision of training in industrial skills.
4. Vacational education in schools should be imparted.
5. IT sector too has a vast potential for growth in terms of employment.
6. With increase in income level, there will be tremendous increase in demand for different
types of services. These can be tapped to generate new employment opportunities.

Que- In what ways can employment be increased in rural areas?

 1. Loans should be provided to small farmers by the government or banks to have more
irrigation facilities like wells and tube-wells to enable them for multiple cropping.
2. New dams and canals should be constructed. This will lead to employment opportunities
in the agriculture sector.
3. Banks should provide agricultural credit to farmers for farming to improve.
4. More schools should be opened in rural areas. This will provide jobs in education sector.
5. Industries like dal-mill, cold storage, honey collection centers should be set-up in rural
areas.
6. Tourism, regional crafts industry, and IT should be encouraged by the govt. to create
employment opportunities.

NREGA-2005-Right to work act-

Or

Why do you think NREGA-2005 is referred as ‘Right to work’.

1. It will provide 100 days assured employment to all needy and unemployed workers.
2. If they are unable to provide employment then they would provide unemployment
allowances.
3. The type of work that would in future help to increase production from land will be
given preference under the act.
4. 1/3 jobs are reserved for the women.
5. Initially it was implemented to 200 districts now it covers 600 districts.

It is now renamed as
MGNREGA : Mahatma Gandhi National Rural Employment Guarantee Act, 2005.

The objectives of implementing MGNREGA 2005 were :

 To give employment opportunities to the people who live in rural areas.

 l To raise the standard of living of the people.
 To implement the right to work.
 Every state can developed tourism, regional craft, IT etc.
 It will provide 100 days assured employment to all needy and unemployed workers.
 If they are unable to provide employment then they would provide unemployment
allowances.
  Division of sectors on the basis of working conditions

OR
Que- Distinguish the service conditions of organized sector with that of.
unorganized sector

Basis Organized sector Unorganized sector

Job security Workers have job security Workers do not have job
security
Salary Workers have regular monthly Workers get daily wages.
salary.
Rules and regulations Rules and regulations are Rules and regulations are not
followed followed.
Benefits````````` Workers get benefit like PPF, Workers do not get any
gratuity, paid leaves, medical benefits.
benefits.
Working hours Working hours re fixed Working hours are not fixed
Working conditions Working conditions are Working conditions are not
favorable. favorable.
Procedures followed It has some formal process There are no formal process
and procedure and procedures.

Classify p-31 q-1&4

Que- How to protect workers in Unorganized sector?

Ans- In rural areas the unorganized sector consists of Landless agricultural laborers Small and
marginal farmers, sharecropper, artisans (weaver, blacksmith, carpenters, goldsmith)
 These should be supported through adequate facilities for timely delivery of seeds, agricultural
inputs ,credit ,storage facilities, and marketing outlets.

In urban areas the unorganized sector consists of Small scale industries, Casual workers in
construction, Trade and transport, Street vendors, Head load workers, Garment makers, rag pickers
etc.
 These should be protected by way of easy credit facilities and other concessions.
 Division of sectors on the basis of Ownership of assets
OR/

Que-Differentiate between the public and private sectors in an economy with examples.
Basis of Public Sector Private Sector
difference
1) Meaning Public sector consists of Private sector consists of those enterprises which
those enterprises which are are owned and controlled by private capital and
owned and managed by the enterprises
govt.

2) Main aim The main aim of the sector is The main aim of the sector is to earn profit.
Public welfare
3) Services This sector provides basic This sector does not provide any services at a
provided facilities like education, health, reasonable rates
food and security to the people.
4) Examples Railway ,post office and BSNL Tata ,Birla, Reliance etc.
5) Decisions The decision regarding The decision regarding production and distribution
production and distribution are are taken by owners or the managers of the
taken by the govt. company.

Examples of public sector activities-

1. Indian Railway 6. Airlines and shipping corporations

2. Atomic energy 7 Street lighting
3. National defense 8 Petroleum and gas etc.
4. Public Parks 9 Health and education
5. Power gyrations 10 Safe drinking water
11 Electricity-Production and distribution
12 Selling of food grains-wheat and rice
13 Housing facilities for the poor
14 To take care of the poorest and ignored regions.

Que- If the govt has a private sector for providing quality services, why do we need to have
a
public sector in our society? Give your view.
Or
Why do we need the public sector?
OR
Role of govt. in public sector.

Ans-Public sector undertakes many activities which are motivated by different consideration,
other than earning maximum profits.
1. There are certain goods which are needed by the society as a whole; Individual cannot be
asked to pay a price for using them. These are called public goods. These goods are
produced by the public .e.g. - roads, bridges, public parks etc.
2. There are some activities which the govt. has to support. e.g. .Supplying electricity at a
price less than the cost of production.
 3. The govt. has to protect the interest of both consumers and producers at a time. E.g. govt
purchases wheat from the farmers at a MSP and sells to the consumers at lower prices.
4. There are a large no. of activities which are primary responsibility of the government.
E.g. provision of quality education & health facilities.
5. The govt. has to make provision for human resource development. Therefor it has to
arrange for some basic facilities.e.g. safe drinking water,nutition etc.
6. The govt. has to resume responsibility for development of the backward regions of the
country.

Que- Explain how public sector contributes to economic development of a nation? (March 2019)
Ans-

1. It promotes rapid economic development through creation and expansion of

infrastructure.
2. It creates employment opportunities.
3. It generates financial resources for development.
4. It is ensuring equality of income, wealth and a balanced regional development.
5. It encourages balanced regional development of small, medium and cottage industries.
6. It ensures easy availability of goods at moderate rates.
7. It contributes to community development i.e. to the HDI via health and educational
services.

Worksheet
1. When we produce goods by exploiting natural resources, in which category
of economic sector such activities come?
2. Which occupation belongs to the primary sector? Mention any one. What
is the full form of MGNREGA?
3. Differentiate between the public and private sectors in an economy with examples
4. Explain the activities of the primary and secondary sectors by giving suitable
examples..
5. All the service sector is not growing equally well in India,” justify the statement
with three arguments.
6. How is tertiary sector different from the other two sectors of economic activities?
Explain.
7. Explain the problem of underemployment in the service sector in urban areas with
examples.