1 Do you think that the classification of economic activities into primary, secondary and

tertiary is useful? Explain how.

A. Yes, it is very useful to classify the economic activities into Primary, Secondary and Tertiary
Sectors as it enables us to know the following:
a. We can find out how many workers are working in different sectors.
b. We can calculate what is the share of each sector in the Gross Domestic Product or GDP.
c. We can discover which sector is growing, and which sector is lagging. If the Tertiary
sector is developing much faster than the Primary sector, it implies that agriculture is
becoming regressive and the government must take measures to rectify this.
d. We can also get to know the interdependence of each sector.

2 How is the Tertiary sector different from other sectors? Illustrate with a few
examples.
A . a. Tertiary sector includes the activities that help in the development of the primary and
secondary sectors.
b. These activities, by themselves do not produce goods but they are an aid or a support
for the production process.
For example, goods that are produced in the primary or secondary sector would
need to be transported by trucks or trains and then sold in wholesale and retail markets /
shops. At times, it may be necessary to store these in godowns. There may be a need
to borrow money from banks to help production and trade. Transport, storage,
communication, banking, and trade are some examples of tertiary activities.
c. As these activities generate services rather than goods, the tertiary sector is also called
the service sector.
d. The tertiary sector is on the rise in most of the developing nations.

3 For each of the sectors that we came across in this chapter, why should one focus
on employment and the GDP? Could there be other issues which should be
examined?
A For each of the sectors mentioned, we have focussed mainly on employment and GDP
because:
a. Growth in GDP and employment are common goals of Five-Year Plans.
b. A focus on employment and GDP helps us to calculate and monitor important factors
like per capita income and productivity of the economy.
c. The Gross Domestic Product helps us to find out the share of each sector in the
national income and thus, take necessary steps required for the improvement of the
country’s economy.
The other issues which should be examined are:
i. Growth of basic services like education, health, sanitation
ii. Methods to eradicate poverty
iii. Achievement of surplus food production in the country
iv. Equality of income and wealth
v. Balanced regional development
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 4. Distinguish between disguised unemployment and open unemployment.

Disguised Unemployment Open Unemployment

i. It is a situation in which more workers are i. When a country’s labour force does not
working in an activity than required. This get opportunities for adequate
situation is also called underemployment. employment, this situation is called open
So, even if some people are removed, unemployment. An example is educated
production will not be affected. unemployment.

ii. Under this, everyone is working but their ii. Under this, a person does not have a job
labour effort gets divided, and they work and it is clearly visible.
less than their potential. So, this kind of
underemployment is hidden.
iii. It is more harmful than open iii. It is not hidden unemployment and can
unemployment as it often cannot be be easily addressed.
properly addressed due to its hidden
nature.

iv. It occurs mainly in the agricultural sector iv. It can occur in any sector but occurs
and unorganised sector where either mainly in the industrial sector.
work is not constantly available or too
many people are employed for the same
work.

5. What do you understand by disguised unemployment? Explain with an example.

How far is it correct to say that disguised unemployment can also be called
underemployment?
A. Disguised unemployment is a situation in which more workers are working in an activity
than required. The people who are actually engaged in such an activity appear to be
employed but are not fully employed.
For example, if for cultivation of one-hectare land, only three workers are required but the
whole family of six people is working as they have nowhere else to go, then, in this case,
three workers are surplus, and this is disguised unemployment.
In such cases, even if the surplus workers are removed, the production will not suffer.
This type of unemployment is also called underemployment as workers perform less than
their potential. Everyone is working but their labour effort gets divided, and no one is fully
employed.

6. “Income and employment will increase if farmers are provided irrigation and
marketing facilities.” Justify the statement.
A. a. If irrigation facilities would be provided, then farmers can produce double crops, pursue
horticulture and other garden crops besides their primary crops.
It will not only solve the problem of disguised unemployment in the sector but also create
new employment opportunities.
b. Marketing, which is a part of the Tertiary sector is dependent on the Primary sector.
Market facility will induce diversification in agricultural activities. Farmers now can sell
their products in the market and will be motivated to produce more for even more earning.
c. If the government invests some money in transportation, storage of crops and better rural
roads, then this can provide productive employment to not just farmers but also others
such as those in services like transport and trade.

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7. How can employment opportunities be increased in both rural and urban areas?
Explain.
Unemployment is a major problem in India, and it is prevalent in both rural and urban
areas.
The steps that should be taken to increase employment can be:
a. Educational facilities should be improved, skill-development centres should be set up and
vocational training should be integrated with mainstream education system.
b. Loans should be given at cheap rates and with less documentation.
c. Small-scale industries should be encouraged. Regional craft industries should be promoted.
d. Tourism sector should be strengthened. By setting up more hotels, restaurants,
amusement parks and tourist destinations, demand for employment in this sector will
increase.
e. The Information Technology sector should be improved. This involves opening of more call
centres, cyber cafes, and software development units.
f. Allied activities like horticulture, pisciculture should be promoted in rural areas.
g. Social safety programs like MGNREGA, NRLM (National Rural Livelihood Mission)
generate employment in rural and urban areas.

8. What are the objectives of implementing the MGNREGA 2005? OR

Why do you think MGNREGA 2005 is referred to as ‘Right to Work’?
a. The Central Government in India made a law implementing the Right to Work in about
625 districts of India under MGNREGA 2005.
b. Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA 2005)
guarantees 100 days of employment in a year by the government.
c. If the government fails in its duty to provide employment, it will give unemployment
allowances to the people.
d. The types of work that would in future help to increase the production from land will be
given preference under the Act.

9. What is Gross Domestic Product? How do we count the various goods and services
for calculating GDP? Explain with examples.
a. Gross Domestic Product is the total sum of the value of the final goods and services of the
Primary, Secondary, and Tertiary sectors of the economy of a country produced during a
year.
b. The final value of goods or services produced in a sector is taken into account and
calculated to avoid double counting.
c. For example, suppose a farmer sells wheat to a flour mill for Rs. 8. The mill grinds it and
sells it to a baker for Rs.10. The baker converts it into bread and sells to a consumer for
Rs.20. Here the final product is bread, so Rs.20 should be added and not Rs.8+ Rs.10+
Rs.20= Rs.38.
d. Intermediate products should not be counted in the figure of GDP. Wheat and flour are the
intermediate goods used for making final products like breads and biscuits. Only the final
products are reaching the actual consumer. The value of the intermediate products is
already counted in the final products and if this is again counted, it will lead to double
counting, causing an error in the estimation of GDP.

10. Why is agriculture an activity of unorganised sector in India? Explain.

Agriculture is an activity of the unorganised sector due to the following reasons:
a. There is no fixed number of working hours.
b. Agricultural labourers do not get any allowances like medical benefit, paid leave, etc. other
than their daily wages.
c. Labourers have no job security. They are often employed only during harvesting and
sowing season. So, they are without any work during the rest of the year.
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d. There are no government rules and regulations to protect them.
e. They are often exploited by their employers and not paid a fair wage.
f. Most of the farmers are dependent on money lenders and relatives for their loan
requirements.

11. “Workers are exploited in the unorganised sector in India.” Support the statement.
The unorganised sector is characterised by small and scattered units which are largely
outside the control of the government. The workers are exploited in the following ways:
a. Low salary: Jobs are poorly paid. The workers in this sector are generally illiterate and
unskilled. So, they are not able to bargain or secure good wages.
b. Long working hours: There are no fixed working hours.The workers normally work 10-
12 hours in a day.
c. No job security: The workers have no job security and can be asked to leave the job at
any time.
d. No facilities and benefits: There is no provision for overtime, paid leave or leave due to
sickness. Many construction site workers do not have adequate safety, security and
facilities at the worksite.
e. No rules and regulations: Government rules and regulations to protect the labourers are
not followed.

12. How can the workers of the unorganised sector be protected on the following
issues: wages, safety, and health? Explain.
The workers in the unorganised sector can be protected in the following ways:

a. Wages:
i. In the unorganised sector the wages are low and even not regular. There is an
absence of provision for overtime, paid leave etc.
ii.The Government can provide protection by fixing the minimum wages and working hours
of these people.
iii.It can frame new laws which can provide provision for overtime, paid leave, etc.

b. Safety:
i.Contractual workers working in mines and at the construction sites always face the
element of risk.
ii.They can get injured or die while working. The Government needs to formulate safety
norms and should look into that they are adhered to.
iii.Even Safety clothing ( Personal Protective Equipment) should be provided to the workers
against any health and safety risks at work. This will help to minimize the likelihood of
injury, illness, and legal issues, and ensure a safe and happy working environment for all.

c. Health:
i.The workers in the unorganised sector face health issues. Health insurance is one way
of providing protection to ensure the healthcare of workers in this sector.
Apart from the above-mentioned points, the following steps can also be taken into
consideration:
ii.Cheap loans can be provided to the self-employed people.
iii.Affordable basic facilities like education, food, safe drinking water, housing can be provided.

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13. Which sector has emerged as the largest producing sector in the Indian economy in
the last decade? Give reasons. OR
“Tertiary sector is not playing any significant role in the development of Indian
economy.” Do you agree? Give reasons in reasons in support of your answer.
OR
Why is service sector growing so rapidly in India? Explain giving five reasons.

The Tertiary sector has emerged as the largest producing sector in the Indian economy in
the last decade because of the following reasons:

a. Development of means of transport and communication:

i. The development of agriculture and industry has led to the development of services such
as transport, communication, storage, trade, etc.
ii. Both communication networks and transportation systems are efficiently integrated, the
ability to swiftly communicate, move people, and transport goods provide a strong base for
the growth of trade and hence is crucial factor in developing a stronger economy.

b. Basic Services:
i. Basic services like education, healthcare and communication require many people to be
engaged in these tertiary sector activities.

c. More income, more services:

i. With increase in the income levels of the people, demand for tourism, banks, shopping
centres, professional training centres and other services have increased.

d. New services:
i. With modernisation and globalisation, some new services like information and
communication technology have become important and essential.

e. Economic liberalisation:
i. Liberalisation of the financial environment has boosted faster growth in financial services.

14. Explain how public sector contributes to the economic development of a nation.
OR
Why is the public sector required to provide certain things at reasonable cost?
OR
How far is it correct to say that several services which cannot be provided by
private sector, can be provided by the public sector? Explain.
There are several aspects of human development like safe drinking water, food and
nutrition, sanitation, education, housing facilities, etc which the government has to
support. The public sector contributes to the economic development of a nation in the
following ways:

a. Basic facilities: There are a large number of activities which are the primary responsibility
of the government. Providing facilities like healthcare, quality education, particularly primary
education, safe drinking water, sanitation etc is the duty of the government.

b. Development of infrastructure: Economic development depends upon the creation of

basic infrastructure such as power, transportation, communication, irrigation, etc.
Its development requires huge capital investment. Moreover, these projects do not
promise high profits. Public sector enterprises can arrange the large investment
necessary for the economy.

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 c. Reduction in regional disparities: The profit-seeking private industrialists are not
enthusiastic enough to set up industry in the backward regions. The government
therefore, finds it necessary to start industrial production in these areas on its own.

d. Support to farmers and consumers: The government in India buys wheat and rice from
farmers at a ‘fair price’. It stores it in its godowns and sells at a lower price to consumers
through ration shops. The Government has to bear some of the cost. In this way, the
government supports both farmers and consumers.

e. Export promotion: The growth of the public sector in the field of iron and steel, petroleum
and natural gas, coal, heavy engineering, electrical machinery has created a strong
industrial base. Some public enterprises like SAIL, ONGC, have contributed to export
products from India substantially.
All these activities contribute to the economic development of the country.

15. Distinguish between the organised and unorganised sector.

OR
How are the activities in the economy classified on the basis of employment
conditions?

Organised Sector Unorganised Sector

i. This sector is registered by the
government. It is governed by various
laws like the Factories Act, Minimum
Wages Act, etc.
ii. The terms of employment are regular.
iii. The workers get regular monthly salary.
iv. The workers get several other benefits
like medical benefits, paid leave,
gratuity, provident fund, etc.
i. This sector is not registered by the
government. This sector is not
governed by any Act.
ii. The terms of employment are not
regular.
iii. The workers do not get regular monthly
salary. They get daily wages.
iv. Workers do not get any benefit apart
from wages.

v. The daily working hours are fixed. v. There are no fixed working hours.

vi. The workers are given an appointment
letter stating all terms and conditions of
the job.
vii. The workers enjoy security of
employment. Working conditions are
also good.
viii. This sector includes banks, hospitals,
schools, etc.
vi. There is no such provision of an
appointment letter.
vii. There is no job security. Working
conditions are very risky.
viii. This sector includes casual labourers,
construction site workers, street
vendors, etc.

16. Give one example to prove the interdependence of the three sectors of the
Economy.
Transportation of cotton from the farm to the textile mills for processing and manufacturing
and later to the markets (Primary- Secondary- Tertiary) is an example, which shows the
interdependence of the three sectors of the economy.

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17. State any three differences between Intermediate goods and Final goods.
The differences between Intermediate goods and Final goods are as follows:

Final Goods Intermediate Goods

i. The goods which are used either for final
consumption or for capital formation.
ii. They are finished goods. They are ready
for use by the final users.
iii. They are made using intermediate
goods.
iv. The value of final goods is included in
the national income.
v. Example: Bread, Biscuits.
i. The goods which are used up in
producing the final goods and services.
ii. They are unfinished goods. They are not
ready for use by the final users.
iii. They are used as raw material for
production of final goods.
iv. The value of intermediate goods is not
included in the national income.
v. Example: Flour, milk, sugar used in
making biscuits.

18. Distinguish between Primary sector and Secondary sector by stating four points of
distinction.
The differences between the Primary and the Secondary sector are as follows:

Primary Sector Secondary Sector

i. It involves economic activities involving
extraction and production of natural
resources.
ii. It provides raw materials to the secondary
sector.
iii. Most of the activities are not dependent
on Secondary sector.
iv. Greater dependence on this sector
indicates an underdeveloped economy.
v. Example: Agriculture, Mining, Forestry.
i. It processes natural resources.
ii. It converts raw materials provided by
primary activities into finished or semi-
finished goods.
iii. It is dependent on the Primary sector for
supply of raw materials.
iv. A shift of economic activities from
Primary to Secondary sectors indicates a
developing economy.
v. Example: Manufacturing, Construction.

19. Differentiate between Public sector and Private sector.

Public Sector Private Sector

i. The ownership of assets and delivery of i. The ownership of assets and delivery of
services is owned and operated by the services is owned and controlled by the
government. individuals or groups of individuals.

ii. The main aim of this sector is not to gain ii. The main aim of this sector is to earn profits.
profits but to ensure welfare of the society.
iii. It provides all the services at an iii. It provides services which are rather
affordable cost to all. expensive and not affordable to all.

For e.g. Railways, Post Office etc. For e.g. Tata Iron and Steel Company Limited,
Reliance Industries Limited etc.

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