Sectors of Indian Economy

Class 10
Notes
Social Science Economics
Chapter 2
Primary sector:
When we produce goods by exploiting natural resources, it is an activity of the primary
sector.

Secondary sector:
Covers activities in which natural products are changed into other forms through ways
of manufacturing, it is also called as industrial sector.

Tertiary sector:
These are the activities that help in the development of the primary & secondary sector.
These activities by themselves do not produce good but they are an aid and support to
the production process. Example: Transportation-Goods that are produced in the
primary sector need to be transported by trucks or trains and than sold in the wholesale
and retail shops; Storage—at times it is necessary to store these products in godowns,
which is also a service made available. Communication -talking to others on telephone);
Banking-borrowing money from the banks. Since these activities are generate services
rather than goods it is also called Service sector.

Gross Domestic Product (GDP):

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 sum of production in three
sectors give Gross Domestic Product—GDP of the country. It is the value of all final
goods and services produced within the country during a particular year.

Underemployment:
This is the situation of where people are apparently working but all of them are made to
work less than their potential. This kind of underemployment is hidden in contrast to
someone who does not have a job. Hence, it is also called disguised unemployment.
Mahatma Gandhi National Rural Employment Guarantee Act 2005, (MNREGA 2005):
Under NREGA 2005, all those who are able to, and are in need of, work have been
guaranteed 100 days of employment in a year by the government. If the government
fails in its duty to provide employment, it will give unemployment allowances to the
people.

Organised sector:
It covers those enterprises or places of work where the terms of employment are
regular and therefore, people have assured work.

Unorganized sector:
It 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.

Public sector:
In this sector government owns most of the assets and provides all the services.

Growing importance of Tertiary sector:

• In any country several services such as hospitals , educational institutions, post

and telegraph services, police stations, courts, village administrative offices,
municipal corporations, defense, transport, banks, insurance companies etc. are
required.
• The development of the agriculture and industrial leads to the development of
services such as transport, trade, storage and the like. Greater the development of
primary and secondary sectors more will be demand of such services.
• As the income level rise, certain sections of people start demanding many more
services like
eating out, tourism, shopping , private hospitals, professional training etc. This is
found especially in the big cities.
• Over the past decade or so certain new services such as those based on the
information and communication technology have become important & essential.

Question-Answer

Question 1.
Explain how public sector contributes to the economic development of a nation.
Answer:
In the public sector, ownership of assets and delivery of services is under the
government. The government spends huge amounts of money in providing various
services to the public at reasonable costs.

The government thus contributes towards the economic development of the nation:
By development of infrastructure, i.e.,

• Construction of roads, national highways, flyovers, metro-rails, railway lines,

irrigation through dams, etc.
• The government provides an impetus to industrial growth by supplying electricity
at affordable rates.
• By running schools and providing good quality of education, the government is
trying to remove illiteracy and taking the nation forward.

Question 2.
Why is NREGA also called the Right to work? Explain the objectives of National Rural
Employment Guarantee Act 2005.
Answer:
Every state or region in India has potential for increasing the income and employment in
that area.
Recognising this, the Central Government in India has passed an act called the National
Rural Employment Guarantee Act 2005,
Main objectives of the NREGA 2005 are:

1. to implement the Right to Work in 200 districts of India.

2. to guarantee 100 days of employment in a year by the Government. In case the
Government fails, it offers unemployment allowance.
3. to give preference to the type of work that will help increase the production from
land.

Question 3.
With the example of sugarcane, explain the interdependence of all the three sectors of
the economy.
Answer:
The primary sector involves production at the most basic level, i.e., through exploitation
of natural resources. Cultivation of sugarcane is an agricultural activity which comes
under the primary sector. Raw materials from the primary sector are converted into
processed goods through manufacturing in the secondary sector. Using sugarcane as
raw material, jaggery and sugar is made in the factories. The tertiary or service sector
provides support to the process of production. It includes transportation, storage,
marketing and sale of products. For instance, transportation of sugarcane from the
fields to the sugar mills. Further on, the transportation of jaggery and sugar from
factories and sugar mills to the markets.
The farmer (Primary sector) also needs fertilisers and seeds which are processed in
some factory (Secondary sector) and which will be delivered to his doorstep by some
means of transportation (Tertiary sector). In this way, for every little process there is
interdependence of the three sectors of the economy on each other.

Question 4.
“The problem of underemployment is not confined only to agriculture”. Support the
statement with examples.
Answer:
The problem of underemployment is not confined only to agriculture. It can also happen
in other sectors.

1. For example, there are thousands of casual workers in the service sector in urban
areas who search for daily employment. They are employed as painters, plumbers,
repair persons and other odd jobs. Many of them don’t find work everyday.
2. Similarly, we see other people of the service sector on the street pushing a cart or
selling something where they may spend the whole day but earn very little. They
are doing such work only due to the lack of better employment opportunities.
3. The unorganised sector includes small and scattered units outside the
government control. Employment is not secure. People can be asked to leave
without any reason. When there is less work, such as during some seasons, some
people may be asked to leave.

Question 5.
What are final goods and intermediate goods? How do they help in calculating (GDP)
Gross Domestic Product?
Answer:
Final goods are goods that are ultimately consumed by the consumer rather than used
in the production of another good.
Intermediate goods are goods used as inputs in the production of final goods and
services. For example, a car sold to a consumer is a final good; components such as a
tyre sold to the car manufacturer is an intermediate good. The value of final goods
already includes the value of all intermediate goods that are used in making the final
good.

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
the three sectors gives the Gross Domestic Product (GDP) of a country. It is the value of
all final goods and services produced within a country during a particular year.

Question 6.
Explain any three ways to solve the problem of underemployment.
Answer:
There are people who are capable of better work and earning more than what they are
getting. The reason for this is that better jobs for which they are qualified are not
available. Such people are termed as underemployed, e.g., a graduate teacher driving a
taxi. Underemployment is most prevalent in the primary or agricultural sector.

Three ways to solve the problem of underemployment:

1. Provision of loans may help in creating jobs for disguised unemployed and
underemployed workers.
The loan money can be used for the promotion of economic activity of the family
adding to the family’s earning or for setting up a cottage industry.
2. Another way is to promote and locate industries and services in semi-rural areas
where a large number of people may be employed.
Example, Setting up a dal mill, opening a cold storage, starting or promoting honey
collection.
3. If local banks give credit to farmers at a reasonable rate of interest, they will be
able to buy agricultural inputs and increase productivity.
4. Centres for vegetables and fruit processing, health centres, educational
institutions, tourism and IT centres will certainly help in creating jobs.

Question 7.
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.

Question 8.
Classify the economic sectors on the basis of nature of activities. Mention the main
feature of each.
Answer:
On the basis of nature of activities, economic sectors are classified into:

1. Primary sector
 2. Secondary sector
3. Tertiary sector

Primary sector forms the base for all other products that we subsequently make. Since
most of the natural products we get, are from agriculture, dairy, fishing, forestry, this
sector is also called sector for agriculture and related activities (stone quarrying, animal
husbandry, etc.).

Secondary sector covers activities in which natural products are changed into other
forms through ways of manufacturing. It can take place in a factory, workshop or at
home.
Examples:
(a) Spinning yam from cotton fibre from plants.
(b) Making sugar from sugarcane.
It is also called the Industrial sector.

Tertiary sector. Activities in this sector do not produce any goods. This sector produces
services that act as aid and support to the Primary and Secondary sectors. Services like
administration, police, army, transport, hospitals, educational institutions, post and
telegraph, courts, municipal corporation, insurance companies, storage, trade
communication and banking are some of the examples of activities of the Tertiary
sector. This sector is also known as Service sector.

Question 9.
What is meant by Gross Domestic Product (GDP)? How is GDP measured in India?
Answer:
Gross Domestic Product (GDP) of a country is the value of all the final goods and
services produced in each sector within a country during a particular year. This
indicates how big the country’s economy is. GDP is measured by the Central
Government Ministry. This Ministry, with the help of all the Indian States and Union
Territories, collects information relating to total volume of goods and services and their
prices and then makes an estimate of the GDP.

Long Answer Questions (LA)

Question 10
Describe the importance of Primary sector in the Indian economy.
Answer:
Importance of Primary sector:

1. Primary Sector provides the basic needs of economy for food and mineral ores.
2. It produces some of the raw materials (like jute, cotton, coal extracted from
mines) for the industrial sector.
 3. The Primary sector continued to be the largest employer in the economy even in
the year 2000, the reason being that Secondary and Tertiary sectors still do not
create enough jobs.
4. The agricultural population in the Primary sector provides a very large market of
consumers for the Secondary sector (for buying finished products like clothes,
goods of daily need, fertilizers, etc.).

Question 11.
How can we create more employment in secondary and tertiary sectors in rural India?
Answer:

1. Investing in basic agricultural infrastructure like construction of dams and canals

for irrigation can lead to a lot of employment generation within the agricultural
sector itself reducing the problem of under employment.
2. If the government invests some money in the storage and transportation of crops,
or makes better rural roads so that mini-trucks reach everywhere, several farmers
can continue to grow and sell these crops throughout the year. This activity can
provide productive employment to not just farmers but also others such as those
in services like transport or trade.
3. Providing credit at a reasonable rate of interest to help farmers buy seeds,
fertilisers, agricultural equipments, pumpsets etc. can generate employment in
rural banking.
4. The government/banks can provide loans at cheap rates to the small farmers to
improve their irrigational facilities like constructing a well so that they can irrigate
their land well and get two to three crops a year instead of one. Thus more people
can be employed in the same field.
5. Another way is to promote and locate industries and services in semi-rural areas
where a large number of people may be employed. For example, setting up a dal
mill, opening a cold storage, starting or promoting honey collection, etc.

Question 12.
Explain the importance of the service sector. (2013)
Or
Explain reasons for the rising importance of the tertiary sector in India.
Answer:
Tertiary sector or service sector plays a very significant role and its importance is rising
day by day:

1. Greater the development of primary sector and secondary sector more would be
the demand for Services.
2. Tertiary sector has become the largest producer in India because various kinds of
Services such as hospitals, educational institutions, post and telegraph services,
police stations, courts, village administrative offices, transport, banks, insurance
companies, etc. are required.
 3. Even development of agriculture and industry leads to the development of
services such as transport, trade and storage, etc.
4. With the rise in income, demand for more services is rising.
For example, eating out in restaurants, tourism, malls and shopping complexes,
schools, professional training, etc.
5. New services like Information Technology and outsourcing have become very
important for modem day trade and industry.
Unfortunately, the rapid growth of the service sector in India has not yet shown the
expected corresponding increase in employment.

Question 13.
How can employment be increased in both rural and urban areas? Explain.
Answer:
Ways to provide more employment opportunities in rural areas:

1. Promote and locate industries and services in semi-rural areas where a large
number of people may be employed. Example, setting up a dal mill, opening a cold
storage, starting or promoting honey collection.
2. Promoting small-scale industries, small-scale manufacturing units, agro-
processing industries and providing loans for the same. The government/banks
can provide loans at cheap rates to the small farmers to improve their irrigational
facilities so that they can get two or three crops a year instead of one. Thus more
people can be employed in the same field.
3. If more dams are built and canal water is provided to all the small farmers, then a
lot of employment can be generated in the agricultural sector.
4. If more money is spent on transportation and storage, then not only small farmers
will be benefitted but many more people can be employed in transport and storage
sector.
5. Investing more in tourism and employing more youth in this sector.

Question 14
“There are several things needed by the society as a whole”. In the light of this
statement explain as to who can provide them at a reasonable cost, the private or the
public sector and why?
Or
Explain any three demerits of private sector.
Answer:
Society as a whole needs several things which the private sector will not be able to
provide at a reasonable cost.
Reasons for this are:

1. Activities in the private sector are guided by the motive to earn profits and not
welfare of the people,
 2. There are several services needed by the society which the private sector cannot
provide at a reasonable price. Activities like construction of roads, bridges,
railways, irrigation through dams etc., require huge amount of money which is
beyond the capacity of the Private sector. Private sector charges high rates for the
use of these services.
3. It is difficult for the Private sector to collect money from thousands of people who
use these services.
4. The Private sector sometimes ignores regional balanced development, equality of
income and development of basic industries.
5. Private sector charges include profit margins whereas the government will charge
a reasonable price for services. It is the primary duty of the government to ensure
the provision of public facilities with a service motto.

Question 15.
Describe any five conditions or aspects that you would consider before accepting a job?
Answer:
Before accepting a job many factors need to be considered apart from income—

1. These include factors such as facilities for families, working atmosphere, or

opportunity to learn.
2. In another case, a job may give less pay but may offer regular employment that
enhances sense of security. Another job however, may offer high pay but no job
security and also leave no time for family.
3. The terms of employment are as per government rules and regulations.
4. The enterprise also gives several other benefits like paid leave, provident fund,
gratuity, etc.
5. The employer also makes provisions for medical benefits and safe working
environment. A safe and secure environment may allow more women to take up a
variety of jobs.