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Chapter 2

SECTORS OF THE INDIAN ECONOMY

Key Points to Remember:

• Primary Sector: Producing a good by exploiting natural resources is

an activity of primary sector. Such as: Agriculture, Dairy fishing
forestry and so on.

• Secondary Sector: covers activities in which natural products are

changed into other forms through ways of manufacturing that we
associate with industrial activities. Such as using cotton fiber from
plant.

• Tertiary Sector: These activities by themselves do not produce a

good but they are an aid or a support for the production process. This
sector is known as Service sector also. Such as transport services,
insurance services and so on.

• Private sector part of a country's economic system runs by

individuals and companies, rather than the government.

• Public sector usually comprised of organization that are owned and

operated by the government and exist to provide services for its
citizens.

• Organized sector is a sector where the employment terms are fixed

and regular, and the employees get assured work.

• Unorganized Sector is a sector where the employment terms are not

fixed and regular, as well as the enterprises, are not registered with the
government.

• Gross Domestic product is a monetary measure of the market value

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of all final goods and services produced in a period i.e. Sum of

Primary sector+ secondary sector + Tertiary sector.

• When more people are working that is needed and even if some
people are removed from work, does not affect the total production.
This situation is called disguised unemployment. It is also
known as Hidden unemployment.

• Mahatma Gandhi National Rural Employment Guarantee Act

was enacted in 2005 which aims to provide employment of 100
days in a year. If it fails to do so, government will provide
unemployment allowances to the people.

1. Primary or agriculture sector. Example-Agriculture, Dairy, Fishing,

Forestry etc.

2. Secondary of Industrial Sector. Example-Manufacturing and

industrial activities etc.

3. Tertiary or Service Sector. Example - Trade, Transport, Banking,

Tourism etc.

Share of Sectors in GDP (%)

1971-72 2011-12
Primary Approximately 15%
Sector 40%
Secondary 25% 25%
Sector
Tertiary 35% 60%
Sector
Total 100% 100%

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Share of Sectors in Employment (%)

1972-73 2011-12
Primary Approximately 49%
Sector 74%
Secondary 11% 24%
Sector
Tertiary 15% 27%
Sector
Total 100% 100%

Very Short Answer Type Questions ( 1 MARK EACH)

Q.1 Shyama works as a researcher in an Institution. While collecting

data she could not classify the working sector of following people.
Help her to do the classification with valid reasons.

A. Yogesh works as lawyer.

B. Shyam Lal Verma runs a dairy.

C. Parmod is an Engineer and works in Industrial sector.

Q.2 Iqbal along with five other members of his family worked as a
farmer and produced 50 lakhs tons wheat. Due to some dispute in
family two members opted out family business, but still they are
able to produce 50 lakh tons Wheat. Can you name such kind of
unemployment?

Q.3 Why is Tertiary sector also called the service sector?

Q.4 What are the main objectives of Public Sector?

Q.5 What are the main objectives of Private Sector?

Q.6 What does Underemployment mean?

Q.7 How does government support both farmers and consumers?

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Q.8 Ramesh is confused, wheather he is working in organized sector or

Unorganized Sector. He is getting Paid leaves with fixed hours of
working. Would you please help him to find out in which sector he is
working?

Q 9. What is MGNREGA stands for? When it was enacted?

Q.I0 How does development of primary and secondary sector demand for
services?

Q.11. Which activity continued to prove largest employer between 1973 to

2013?

Q.12. Contribution of which sector is largest in GDP?

Q.13. Name the sectors which forms the base for all other products?

ANSWERS

Ans.1 A. Being a lawyer Yogesh is providing legal services. Therefore his

work comes in the Tertiary' sector:

B. Shyam Lal Verma runs a dairy and he dependent on biological

process of the animals and availability of fodder etc. The product
milk also is a natural product. So his work comes under the Primary
Sector.

C. As Parmod is working in Industry which basically depends upon

primary sector for raw material. So his work comes under the
Secondary sector.

Ans. 2 Disguised unemployment

Ans. 3 Since these activities provides services rather than goods, the
tertiary sector is also called the service sector.

Ans. 4 To provide basic facilities to all their countrymen with the purpose of
social welfare.

Ans. 5 To earn more and more profit.

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Ans. 6 In a situation of underemployment, people are apparently working

but all of them are made to work less than their potential.

Ans. 7 The government in India buys wheat and rice from farmers at a fixed
price. This is stores in its godowns and sells at a lower price to
consumers through ration shops. Here government has to bear
marginal cost. In this way, the government supports both farmers
and consumers.

Ans. 8 Organized sector

Ans.9 MGNREGA is stands for Mahatma Gandhi National Rural

Employment Guarantee Act. It Was 'implemented in 2005.

Ans.10 The development of agriculture and industry leads to the

development of services such as transport, trade, storage etc.
Greater the development of the primary and secondary sectors,
more would be the demand for such services.

Ans. 11 Agriculture

Ans.12 Tertiary Sector

Ans. 13 Primary Sector

Long Answer Type Questions (3 or 5 Marks Each)

Q.1 Differentiate between economic and non-economic activities. Give
any two points.

Q.2 Using examples from your area compare and contrast activities and
functions of Private and Public sectors.

Q.3 Distinguish between organized and unorganized sector.

Q.4 Explain the objective of implementing the MGNERGA 2005.

Q.5 What are the different types of unemployment in India?

Q.6 How do we count the various goods and services and know the total
production in each ''sector''?

Q.7 What are the various ways to provide employment opportunities in

rural areas?

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Q.8 ''There has been a big change in the three sectors of economic
activities in India but similar shift has not taken place in the share of
employment." Explain the above statement.

Q.9 Explain how does the Public sector contribute to the economic
development of a nation?

Q.10 Why is the tertiary sector becoming the most important in India?

Q.11 The workers in the unorganised sector need protection on the

following issues:wages, safety and health. Explain with example.

Q.12 Mention the major problems faced by farming sector?

Q.13 How do we create more employment in the agriculture sector?

Q.14 Discuss the historical changes in the three economic sectors?

Answers

Ans 1. Economics activities are such activity which gets you some income
while performing them. For example, a doctor is earing by treating
his patients.

Non-economic activities are the activities from which do not gain

anything earn you any income. For example, a doctor treating his
own family members doesn't earn any money.

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Ans. 2
Public sector Private sector
The main aim of this sector is public The main aim of this sector is to earn
welfare. maximum profit.
It is controlled and managed by It is controlled and managed by an
Government. individual of group of individuals.
Necessary facilities provided by All the facilities provided by Individual
Government. or group of individuals.
Employment is secured. Employment is not secured.
Fixed wages and important Generally neither fixed wages nor
facilities are Provided. Such as other important facilities are
medical claim and so on. provided.
The sector provides basic facilities The sector provides consumer goods
like education, health, food and to the people. For example —
security to the people, for example, TISCO, Reliance and so on.
BSNL, Post office and so on.

Ans. 3 Unorganized sector

Organized sector
Fixed working hours. Working hours are not fixed.
Fixed Minimum wages Less than minimum wages fixed by
government.
Secured employment. Employment is not secured.
Enjoyable working conditions. Working condition is not up to the
mark.
Other facilities such as medical, No such facilities provided.
gratuity, Other pension's are;
provided.

Ans. 4 • Its aims to provide employment of 100 days in a year.

• All those who are eligible to work would be guaranteed by
government. If government fails to do so, it will give
unemployment allowance to people.
• To increase the income and employment to people.
• Every state/region can develop tourism, regional craft, IT etc.
for additional employment.

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Ans. 5 Underemployment or disguised employment : A situation where

more people are engaged than required. So, even if you turned
people out, production will not be affected. It is called
underemployment.
Seasonal unemployment : When people are unemployed for a
particular season, it is as seasonal unemployment. For example, if
farmers are ploughing land only for rabi season then , they, become
unemployed for the rest of the season.
Ans. 6 Economist suggests that the' 'values of goods and services should
be used rather than adding up the actual numbers. The value of
goods and services in the three sectors are calculated and then a
added up. Not every good(or service), that is produced and sold,
needs to be counted. It makes sense, only to include final goods and
services.
Intermediate goods are used up in producing final goods and
services. The value of final goods already includes the value of all the
intermediate goods that are used in making the final goods and
services.
So the value of final goods and services produced in each sector
during a particular year, provides the total production of the sector for
that year. And the sum of production in three sectors gives us the
'Gross Domestic Product."
Ans.7 • Provide loans to small farmers for cultivation, irrigation and so on.
• Dams, canal can be constructed will lead to a lot of employment
generation.
• Construction of roads in rural area creates employments in rural
community.
• More and more schools should be opened which would create jobs
in education sector and literacy as well in rural area.
• To improve the health situation, we need more doctors, nurses
health workers to work in rural area.
Ans.8 • In primary sector, modern technology has been introduced in
agriculture. With the arrival of green revolution and advanced
irrigation methods, there are noticeable changes in this sector.

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• Industrial production has also increased several times therefore

providing more employment opportunities to "the unemployed and
underemployed in this sector.

• There are lots of casual workers in the service sector in urban

areas who search for employment on daily wages. In the rural
areas too, a lot of casual workers sometimes Intermittently do
not get job. Many of them are disguisedly unemployed. So
besides changes unemployment still exists in India.

Ans.9 • It promoted rapid economic development through creation and

expansion of infrastructure.

• It creates the employment opportunities.

• It generates financial resources for development.

• It encourages development of small, medium and cottage

industries. It brings the social justice.

Ans.10 • It provides basic services to the people. Ex--Hospital, Post Office,

Telegraph etc.

• For the development of agriculture and industry, transport and

trade like activities are vital

•With the increase of income level of the people more service were
needed or demanded by people.

•New services based on information and communication have

become essential.

• It provides employment to people in large number.

Ans. 11 The employee refuse to follow laws that protects labourers. That is
why protection is needed.
The workers are not paid a fair wages and hence need protection.
Job is not secured that is why they need protection.
The workers get no other benefits like provident fund, gratuity, paid
leaves, medical benefits etc.
No pension after retirement.

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Ans. 12 Unirrigated land

Fluctuation in income
Debt burden
No job in the off season
Compelled to sell their grains to the local traders soon after
harvest.
Ans.13 Loans could be given to farmers to buy the agriculture equipments
Dams can be built to irrigate dry areas.
Seeds and fertilizers could be subsidized.
Storage facilities could be provided.
Transport facilities could be increased.
Ans. 14 After independence to 1972 primary sector was prominent in
Indian GDP.
As farming method improves and surplus food was produced
people channelized their energy towards manufacturing.
Very soon secondary sector gained prominence
Because of development of primary and secondary sector,
information and technology, trade, transport etc, tertiary sector
gained prominence.
In 2011-12 share of tertiary sector in Indian GDP was
approximately 60%.

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Source: EDUDEL