Chapter 2 – Sectors of the Indian Economy

ECONOMICS

Do question numbers 1,3,4,9,11,14,16,21,23 in the notebook.

Q.1 What are primary, secondary and tertiary sectors?

1. All economic activities can be divided into three sectors – Primary, Secondary, Tertiary based on nature
of activity.

● When we produce a good by using the natural resources, it is a primary sector activity eg.,
products we get from agriculture, dairy, fishing and forestry.
● The secondary sector is also the manufacturing sector i.e. associated with industrial activity for eg.,
working in a factory, workshop, converting earth into bricks or using sugarcane to make sugar.
● Activities which are an aid to the production process are called the tertiary sector. They generate
services – eg., banking, transportation, lawyers, teachers, etc.

Q.2.How are goods and services counted to know the total production in each sector?

● Economists suggest that with so many thousands of goods and services produced, the best way is
to count the values of the goods and services rather than adding up the actual numbers eg., 10,000
kgs of wheat is sold at Rs 8 per kg, the value of wheat will be Rs 80,000/-
● The precaution to be taken here is that only the final goods and services should be counted as they
already include the value of all intermediate goods for eg., a biscuit packet worth Rs 60/- already
includes the value of flour used in it (for eg., the flour could be worth Rs 10/-. )
● Intermediate goods are used up in producing final goods and services.

Q.3. What is GDP ? How do we count various goods and services for calculating the GDP of a country?
Explain with example

● Ans: Gross Domestic Production

● 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.
● The sum of production in the three sectors gives us the GDP (Gross Domestic Product). This is
calculated by a central government ministry.

Q.4 Show how the tertiary sector has emerged as the largest producing sector in India.

● Ans: Importance of the Tertiary Sector :

● Basic services like hospitals, educational institutions, defense, and transport are part of the tertiary
sector.
● The development of agriculture and industry leads to the development of services

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 ● As the income level rises, tourism, shopping, private schools, and professional training also expands.
People start demanding more services this leads to the expansion of the tertiary sector.
● Information and communication technology also play an important role in this expansion.
● A large number of workers are engaged in this sector, as the demand for services grows
Q.5 Discuss the historical change in sectors of economy

● At the initial stage of development, primary sector was the most important sector of economic
activity.
● In the past 100 years, there has been a further shift from the secondary to tertiary sectors in the
developed world.
● The service sector has become the most important in terms of total production.

Q.6 What are the limitations of the tertiary sector?

● At one end there are a limited number of services employing highly skilled and educated workers.
● At the other end, there are a number of workers engaged in services like repair persons, small shop
keepers, etc. They haven’t benefitted so much with the rise of the tertiary sector as they barely
manage to earn a living, continuing to perform these services as no alternative opportunities for
work are available for them.
● India also faces a problem of underemployment, disguised unemployment.

Q.7 What is Disguised unemployment?

Ans Disguised unemployment is a situation of underemployment, where people are apparently working
but all of them are made to work less than their potential.

Q. 8 How can more employment be created?

● Construction of new dams and other irrigation projects can lead to employment generation within
the agricultural sector.
● Better rural road construction and transport will also help in generating employment.
● If a farmer gets credit from a bank at reasonable rates, he or she will be able to purchase seeds, etc
and will not need to look for employment elsewhere.
● Setting up local industries like cold storages, honey collection centres and dal mills will also
generate employment and help to improve rural economy.
● Introduction of MGNREGA 2005 (Mahatma Gandhi National Rural Employment Generation Act).
Under this act,100 days employment is guaranteed in 625 districts of India.
If the government is not able to provide employment, it will give unemployment allowances to the
people.

Q.9 Differentiate between Organised and Unorganised Sectors

Organized sector:
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 1. In this sector, terms of employment are regular and people have assured work.
2. They are registered by the government.
3. Workers enjoy security of employment, they have to work for fixed hours, they are paid
overtime and enjoy several other benefits like paid leave, payment during holidays, Provident
Fund, gratuity, pension, retirement benefits, medical benefits, etc.
4. Entities under Organized sector have to follow the rules and regulations which are given in
various laws (Factories Act, Minimum Wages Act, Payment of Gratuity Act, Shops and
Establishment Act).

Unorganized sector:

1. In this sector, employment is not secure and jobs are irregular.

2. Here government rules are not followed as they are outside the control of the government.

3. Usually, they offer low-paid jobs, no provision for overtime, paid leave, holiday leave or sick leave.

4. Employees can be asked to leave without any reason. One can also see a large number of under-
employed workers in this sector.

Q.10: Using examples from your area compare and contrast the activities and functions of private and
public sectors.
Answer: The activities and functions of private and public sectors in our area may be compared as
mentioned below:

Private Sector Public Sector

(1) The vegetable shops, grocery shops, sweet (1) Mother Dairy booths which sell vegetables,
shops etc. are in private sector. fruits, milk and milk products are in public sector.

(2) These are owned by public sector undertaking

(2) These are owned by private individuals.
‘Mother Dairy’

(3) Vegetables and other products are generally of (3) The vegetables and fruits are generally of
good quality. average or poor quality.

(4) The rates may be slightly higher (4) The rates are lower than the market rates.

(5) The companies like Reliance, Tata, Airtel provide (5) MTNL provides telephone services. There are
telephone and TV services which are of very good complaints against their services. On many
standard. occasions, telephones remain out of order, hut

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 they do not charge for that period.

(6) The shopkeepers provide free home delivery (6) Mother Dairy or any other public under taking
service without any extra-charge. do not provide free home delivery service.

(7) Private schools provide education of good (7) The schools run by MCD do not provide quality
quality. Their students are well-dressed and education. Their students are not well-dressed and
disciplined. Their medium of instructions is always disciplined. Their medium of instructions is
English. generally Hindi.

Q.11 What is MGNREGA? What are the salient features?

1) National Rural Employment Guarantee Act 2005, later renamed as the "Mahatma Gandhi National Rural
Employment Guarantee Act", MGNREGA), is an Indian labour law and social security measure that aims to
guarantee the 'right to work'. The MGNREGA is a employment generation scheme of the government of
India for rural areas.

(2) This Act was passed in September 2005.

(3) It provides 100 days of wage employment every year to every rural household.

(4) One - third of the proposed jobs have been reserved for women.

(5) Gives legal guarantee of wage employment to the adult members of rural households who are willing to
do unskilled manual labour subject to a maximum of 100 days per household.

(6) Applicable for all villages in the district.

(7) Every rural household has the right to register under MGNREGA

Q.12 Underemployment continues to be rampant in the rural areas. Suggest any three ways through
which employment for rural people can be generated.

Ans: People can be employed in projects like construction of dam/canal/ roads in the village.

The government invests and employs people in providing transportation and storage services.

People can be employed in services like banking, trade, etc.

The government can identify, promote industries and services in semi-rural areas to enhance employment.

The government can open centres to give them training and financial assistance to help them become self
– employed.

Q.13. Rohan works in a bank as a clerk while Sumit works on a construction site as a labourer. Describe
the difference in their conditions of work and judge the benefits and drawbacks of working in the
respective sectors.

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Ans: Rohan works in an organised sector; he will enjoy the security of employment. He will be expected to
work only a fixed number of hours. If he works more, he will have to be paid overtime by the employer. He
will also get several other benefits from the employers like getting paid leave, payment during holidays,
provident fund, gratuity, etc. He is supposed to get medical benefits and, under the laws, the bank
manager has to ensure facilities like drinking water and a safe working environment. When he will retire,
he will get a pension as well.

In contrast, Sumit works in the unorganised sector which is characterized by small and scattered units
which are largely outside the control of the government. There are rules and regulations but these are not
followed.

So, his job will be low-paid and often not regular. There will be no provision for overtime, paid leave,
holidays, leave due to sickness etc. Employment is not secure. He can be asked to leave without any reason
when there is less work, such as, during some seasons. A lot also depends on the whims of his employer.

Q.14 Service sector in India employs two different kinds of people. Who are these?

Ans: The service sector in India employs two different kinds of people. These are primary and ancillary
workers. Primary workers include those who directly provide services while ancillary workers are those
who give services to the service providers. For example, consultants make available their services to
consultancy firms, etc.

Q.15 Explain how the public sector contributes to the economic development of a nation.

Ans: The public sector plays a crucial role in contributing to the Human Development Index via its
functioning in health and education services. Also, by buying food grains at a “fair price” from farmers,
providing electricity, water, postal services at low rates, the government ensures that the people have a
good living. It utilizes taxes and grants to pay for the same. Thus, it plays a vital role in adding to the
economic development of a nation, based on its human development situation.

Q16. Workers are exploited in the unorganized sector. Do you agree with this view.? Give reasons in
support of your answer.

Answer:
Yes, workers are exploited in the unorganized sector. This would be clear from the following points:

1. There is no fixed number of working hours. The workers normally work 10 – 12 hours without paid
overtime.

2. They do not get other allowances apart from the daily wages.

3. Government rules and regulations to protect the laborers are not followed there.

4. There is no job security.

5. Jobs are low paid the workers in this sector are generally illiterate, ignorant and unorganized. So
they are not in a position to bargain or secure good wages.

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 6. Being very poor they are always heavily in debt. So, they can be easily made to accept lower wages.

Q.17 Why didn’t shift out of primary sector happen in case of employment although there has been a
change in the share of the three sectors in GDP?
Answer:
A remarkable fact about India is that while there has been a change in the share of the three sectors in
GDP, a similar shift has not taken place in employment.

1. A similar shift out of primary sector did not happen in case of employment because not enough
jobs were created in the secondary and tertiary sectors.

2. Even though industrial output or the production of goods went up by eight times during the period,
employment in the industry went up by only 2.5 times.

3. While production in the service sector rose by 11 times, employment in the service sector rose less
than three times.
As a result, more than half of the workers in the country are working in the primary sector, mainly
in agriculture, producing only a quarter of the GDP.

Q.18 Describe certain activities of public interest on which the government has to focus on
priority basis.

Activities of public interest on which the government needs to focus on a priority basis

1. Education. The government must provide adequate education facilities in all rural and urban
areas. The government must necessarily focus on education for girls so that all girls are able
to acquire at least secondary level schooling. Running proper schools and providing quality
education, particularly elementary education, is the duty of the government.

2. Health and Nutrition. Basic health care facilities are a must for all. Establishment of
government hospitals, clinics and dispensaries, especially in rural areas, to provide
subsidized and unadulterated medicines to the poorer sections of society.

3. An effective Public Distribution System—proper functioning of ration shops and equitable

distribution of food grains is very essential.

4. Transportation. A well- developed public transport system to make it easy for general public
to commute.

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 5. Electricity. It is the duty of the government to provide electricity and water at reasonable
rates to the common man and prevent him from exploitation by private companies.

19. A research scholar looked at the working people in the city of Surat and found the following.

Place of Work Nature of Percentage of working

Employment People

In offices and factories registered with the Organised 15

government

Own shops, office, clinics in 15

marketplaces with formal license

People working on the street, 20

construction workers, domestic workers

Working in small workshops

usually not registered with the government

Ans. Complete the table. What is the percentage of workers in the unorganised sector in this city?
Answer:

Place of Work Nature of Percentage of working

Employment People

In offices and factories registered with the government Organised 15

Own shops, office, clinics in marketplaces with formal Organised 15

license

People working on the street, construction workers, Unorganised 20

domestic workers

Working in small workshops usually not registered with Unorganised 50

the government
Q.20 Distinguish between open unemployment and disguised unemployment.
Answer: Open unemployment is when a person is willing to work, is educated but is unable to get a job
and work. This kind of unemployment is visible. On the other hand, disguised unemployment is when a
person is apparently working but is made to work less than his or her potential. This kind of employment is
quite evident in villages where people working in farms consider themselves employed but are actually
working less than their potential.

21.“Tertiary sector is not playing any significant role in the development of Indian economy.” Do you
agree? Give reasons in support of your answer.
Answer: No, this is not correct. The tertiary sector is playing a significant role in the development of the

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 Indian Economy. In the year 2003, the tertiary sector replaced the primary sector as the most producing
sector in the country. A few reasons to support this are given below:

1. The primary and secondary sectors can only flourish if the tertiary sector is there to support them.

2. The tertiary sector adds up a lot to the National income of the country.

3. Education, which is the basis of everything, comes under the tertiary sector. A person working as a
teacher comes under the tertiary sector.

4. This sector provides the maximum employment opportunities to the people in the country.

22..A study in Ahmedabad found that out of 15,00,000 workers in the city, 11,00,000 worked in the unorganised sector.
The total income of the city in this year (1997-1998) was Rs 60,000 million. Out of this Rs 32,000 million was generated
in the organised sector. Present this data as a table. What kind of ways should be thought of for generating more
employment in the city?

Answer:

Total Workers in Total Income of Income generated by Income generated by

Workers Unorganised Sector City (1997-1998) organised sector unorganised sector

15,00,000 11,00,000 60,000 million 32,000 million 28,000 million

The table clearly shows that the income generated in unorganised sector is close to 50% of the total income of
Ahmedabad. In order to increase employment opportunities for the people more industries should be set up, proper
education must be provided to all and proper facilities under the public sector must be provided to all.

23. The following table gives the GDP in Rupees (Crores) by the three sectors:

Year Primary Secondary Tertiary

2000 52,000 48,500 1,33,500

2013 8,00,500 10,74,000 38,68,000

(i) Calculate the share of the three sectors in GDP for 2000 and 2013

(ii) Show the data as a bar diagram similar to Graph 2 in the chapter.
(iii) What conclusions can we draw from the bar graph?
Answer:
(i) In 2000, primary sector = 22.22%, secondary sector = 20.73%, tertiary sector = 57.04% And In 2013,
primary sector = 13.94%, secondary sector = 18.70%, tertiary sector = 67.36%

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(ii)

(iii) We can draw

the conclusion that the share of the tertiary sector in the GDP has increased by 10%, while that of the
primary sector has almost halved. The secondary sector has grown by about 2% in the last 13 years.

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