Our Own High School, Al Warqa’a, Dubai

Chapter 2 - SECTORS OF THE INDIAN ECONOMY

2023-2024

Q1. Write a short-note on each of the sectors.

A. Primary Sector

• When we produce goods by exploiting natural resources, then it is an activity of primary

sector.

• It forms the base for all other activities.

• Agriculture, fishing, forestry, mining are important examples of primary activities.

Secondary Sector

• When natural products are changed into finished products through various ways of
manufacturing, then it is an activity of the secondary sector.

• Manufacturing of cloth from cotton, sugar from sugarcane and steel from iron are
important examples of secondary activity.

• All these are secondary activities because final product is to be produced not by nature
but has to be made and therefore, some process of manufacturing is essential.

Tertiary Sector

• All activities which deal with services come under tertiary sector.

• The tertiary activities help in the development of the primary and secondary sectors.

• Transport and communication, health, education, public administration, defense, banking

and insurance etc. are important examples of tertiary activities.

Q2. While calculating the National Income only the value of final goods and services
are considered. Explain the statement with an example.
A. The value of only final goods and services are included in the calculation of National Income
of the country. This is to avoid double-counting.

A farmer produces one ton of wheat and sells it for Rs. 100 to a flour mill. As far as the
farmer is concerned, the sale of wheat is a final sale for him. But purchase of wheat by the
flour mill is an intermediate good. He converts the wheat into flour and sells it to a baker
for Rs. 150. The flour mill treats the flour as a final product but for the baker it is an
intermediate good. The baker sells the bread to the shopkeeper for Rs. 200 and the
shopkeeper to the consumer for Rs. 250

Value of output = Farmer (Rs. 100) + Flour mill (Rs. 150) + Baker (Rs. 200) + Shopkeeper
(Rs. 250) = Rs. 700. So, while calculating national income only the value of final output
i.e. Rs. 250 should be included and not Rs. 700.
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Q3. Differentiate between final goods and intermediate goods.

• Final goods are those goods which are used either for final consumption or for investment
whereas Intermediate goods are those goods which are used up in producing final goods
and services.

• Final goods have crossed the boundary line of production whereas Intermediate goods
are within the boundary line.

• The value of final goods is included in the national income whereas the value of
Intermediate goods is not included in the national income.

Q4. Define Gross Domestic Product (GDP) and which agency fulfils the task of measuring
the GDP in India Explain.

• GDP is the market value of the final goods and services produced within the domestic of a
country for one year.

• Central government ministry fulfils the task of measuring the GDP in India.

• The ministry with the help of various government departments of the Indian states and
Union territories collect information relating to total volume of goods and services
and their price and estimate the GDP

Q5. Why is the tertiary sector becoming so important in India?

Basic Services - In any country, several services such as hospitals, educational institutions,
police stations, defense, transport, banks, insurance companies etc. are required. In a
developing country, the govt. has to take the responsibility for the provision of these
services.

• Development of means of transport and communication - The development of

agriculture and industry leads to the development of services such as transport,
communication, trade etc.

• More income means more services - As income level rises, people demand more
services like tourism, shopping centers, schools, banks etc.

• New Services - With modernization and globalization some new services based on
information and communication technology has become important and essential.

Q6. Suggest some ways which can be helpful in creating employment in rural areas.

Diversification of agriculture - More than 60% of our workers are employed in agriculture. But
the farmers are producing only limited crops. Farmers should be encouraged to adopt pisciculture,
horticulture, animal rearing etc. along with cultivation of crops.

• Cheap Credit - Most of the farmers depend on informal sources of credit, i.e. money
lenders, relatives, traders etc. who charge a very high rate of interest. Government should
encourage the commercial banks to provide loans to farmers at cheaper rates.
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 • Provision of basic facilities - Rural areas lack basic facilities like roads, transportation,
banking, warehouses, market etc. The govt. should invest some money in these sectors
so that Indian villages can be linked to other markets.

• Promotion of local industries and other activities - Cottage and small-scale industries
should be encouraged in semi-rural areas. In villages, near forest areas, honey collection
centers can be started where farmers can come and sell wild honey.

• Government opening schools will create 20 lakh jobs. If we improve the health
situations, many doctors’ nurse’s health workers jobs will be created.

• Government giving support to Tourism, regional crafts, and IT services will give
additional jobs.

Q7. Write a short note on the ‘National Rural Employment Guarantee Act 2005’.

A. This act is implemented as ‘Right to Work’ in 200 districts of India. The main objective of this
act is to provide employment to one person per family for at least 100 days in a year. If the
government fails to provide employment, it will give unemployment allowance to the people.
This type of work in future will help to increase production.

Q8. Write a short note on ‘Disguised Employment’ (hidden employment).

A. It refers to a situation in which more workers are working in an activity than required. The
people who are actually employed in such an activity appear to be employed but are not fully
employed. For example, for the cultivation of one hectare of land, 10 workers are required,
but instead of 10 workers, 15 workers are employed. In this case 5 workers are
disguisedly unemployed. It these surplus workers are removed, production does not
suffer.

Q9. What are the advantages of working in an organized sector?

• They are registered by the government

• They work for only a fixed number of hours. If they work more, they have to be paid
overtime by the employer

• They also get several other benefits from the employers like paid leave, payment during
holidays, provident fund, gratuity etc.

• They also get medical benefits and under the laws, the factory manager has to ensure
facilities like drinking water and safe working environment.

• They follow processes and procedures.

• Workers in the organized sector enjoy security of employment

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Q10.What are the disadvantages of working in an unorganized sector?

• It is largely outside the control of the government

• There is no provision for overtime, paid leave, holidays, leave due to sickness etc.

• Employment is a subject to high degree of insecurity.

• A large number of people doing small jobs such as selling on the street or doing repair
work come under unorganized sector.

• Workers working in an unorganized sector get fewer wages

Q11) Why is it common to find many organized sector enterprises in the unorganized
sector.

• Ans They adopt such strategies to evade taxes and refuse to follow laws to protect
Laboure’s.

• As a result, a large number of workers are forced to enter the unorganized sector jobs,
which pay a very low salary.

• They are often exploited and not paid a fair wage.

• These jobs are not secure and have no other benefits.

Q12.Who are the people that work in an unorganized sector?

A. In the rural areas, the unorganized sector consists of landless agricultural laborer’s, small
and marginal farmers, share croppers and artisans (such as weavers, blacksmiths,
carpenters etc.

B. These workers need to be protected by supporting through adequate facility for timely
delivery of seeds, agricultural inputs, credit storage facilities and marketing outlets.

In the urban areas, unorganized sector comprises mainly of workers in small-scale

industries, casual workers in construction, trade and transport etc. and those who work as
street vendors, garment workers, rag pickers etc.

Their small scale Industry need support from the government for procuring raw material and
marketing of output.

Q13.Which sector has the largest number of employers?

A. Primary sector.

Q14.Which sector has shown the highest growth rate in India?

A. Tertiary sector.

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Q15.Differentiate between Public and Private Sector

A. Public Sector

• It is a sector that is owned, managed and controlled by the government.

• The main motive of Public Sector is public welfare.

• Prices are determined by a central authority.

• Indian Railways, Bharat Heavy Electricals Ltd. is some examples of Public Sector.

Private Sector

• It is a sector that is owned, managed and controlled by an individual or a group

of individuals.

• The main motive of Private Sector is to earn maximum profits.

• Prices are determined by the market forces of demand and supply.

• Bajaj Autos, Reliance etc. are some examples of Private Sector

Q16.Explain how public sector contributes to the economic development of a nation.

• The public sector can set up heavy industries which require a huge amount, but private
sector cannot do so.

• The public sector aims at maximum social welfare as compared to maximum profit
motive of the private sector.

• The public sector provides many essential commodities at quite a reasonable cost
which the private sector cannot provide.

• The public sector, mainly held by the government provides health and educational
facilities free of cost or at the very nominal price.

• The Public sector invest in construction of roads, bridges, railways, generating electricity,
constructing dams and thus accelerating the economic development of a nation.

Q17.There is several things needed by the society as a whole but which the private sector
will not provide at a reasonable cost. Why?

• Some of these needs spending large some s of money, which is beyond the capacity of the
private sector.

• Collecting money from thousands of people who use these facilities is not easy.

• Even if they do provide these things they would charge a high rate for their use.

• E.g. Construction of roads, bridges railways, harbours, generating electricity, providing

irrigation through dams.

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Q18.Give example to prove that many private sector companies need government support
to continue their business.

A. Selling electricity at the cost of generating may push up the cost of production of industries
and many small-scale units may be able to afford it. The government steps in and subsides
the electricity cost and bears a part of the cost.

Q19.Describe key areas of services which are the primary responsibilities of the
Indian Government.

• Health and Education are two key areas in which the government has a
primary responsibility to improve.

• Illiteracy, infant mortality rate, deaths during child birth, malnutrition among children are to
seriously rectified. Other aspects like safe drinking water, housing for the poor and food
and nutrition are also necessary.

Q20.Labourers are exploited in an unorganized sector. Do you agree with this view? Give
reasons.

• Workers working in the unorganized sector in the rural areas like landless agricultural
labourers, small and marginal farmers and different artisans are exploited because the
government has very little control over this sector. The small and marginal farmers which
form nearly 80% of the rural households in India should be given adequate facilities for
timely delivery of seeds, agricultural inputs, credit, storage facilities and marketing outlets.
Workers in the urban areas like workers in small scale industries, casual workers in
construction, trade and transport etc. should be provided govt. help for procuring raw
material and marketing of their output. Casual workers should also be given full protection
against exploitation of the rich landlords and factory owners

Mr. Gerard Gomes