 Economic Activities :-


 Secondary Sector :-

 The sector in which natural products (which we get from primary sector) are changed into

other forms through ways of manufacturing is known as secondary sector.

 It is also called manufacturing or Industrial sector.

 For Example obtaining yarn and cloth from cotton fibre, sugar or gur from sugarcane etc.

 Tertiary Sector :-

 The sector which provides support and helps in the development of primary and secondary

sector is known as Tertiary Sector. It does not involve the production of goods but is an aid to

the produced goods.

 This Sector is also called Service sector.

 For Example banking, transportation, trade, Communication etc.

 Comparing three sectors : - All the activities in primary, secondary and tertiary activities are

interdependent on each other as :-

 goods and services produced in one sector is used in other sectors also.

 If one sector will grow the other sector will grow as well.

 Goods and services are of two types : -

1. Final goods and services : - Those goods and services that are directly consumed by the

consumers and are not meant for further production and processing.

2. Intermediate goods and services : - Those goods and services that are used for further

production on processing.

 What is 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 the sum of production in the three sector

gives GDP or Gross Domestic Product.

 Values of only final goods and services are included.

 The Central Statistics Office (CSO), under the Ministry of Statistics and Program

Implementation, is responsible for calculating the GDP of India.

 Historical Changes in Sectors: - It has been observed in the history of many nations that the

primary sector was the most important sector, as most people were involved in agricultural

activities and most goods were produced naturally. However, there has been a dramatic shift from

the primary sector to the secondary sector and then to the tertiary sector.

Let’s have a look at this transformation point by point:

  According to the GDP of the three sectors, the primary sector was the major producing sector

between 1973 to 1974. The reason was obvious: as the agriculture sector began to grow and

prosper, much more food was produced than before.

 Moreover, during this time, most of the goods produced were natural products, and most

people were employed in the primary sector.

 As we read in history, the industrial revolution changed the landscape of the economies.

Moreover, the secondary sector became the most important sector in the economy as new

manufacturing methods came into the limelight. Those people who were earlier working on

farms now they were working in factories.

 The secondary sector gradually became the most significant of the three sectors, employing the

majority of the workforce. The rationale behind this drastic shift was that the people were

purchasing goods made in factories at cheap rates.

 Eventually, the tertiary sector became the most important sector in the past 100 years.

Today, if you observe, most people are employed in the service sector.

 According to the GDP of India, in the year 2013 to 2014, the tertiary sector became the

largest producing sector.

 Reasons for the rising importance of Tertiary sector : - There are four major reasons why the

tertiary sector became the economy’s most important sector.

1. Services like hospitals, banking, communication, police station, courts, municipal corporation,

banks, transport, insurance, etc., are basic services in any country.

2. The second and most important reason is the development of the primary and secondary

sectors will eventually lead to the requirement for services like transport, trade, storage, etc.

Thus, higher development of these two sectors will eventually increase the demand for tertiary

services.

3. The third crucial rationale is the standard of living. As people’s income level and standard of

living start rising, certain specific sections of people start demanding extra services like private

hospitals, private schools, tourism, shopping, professional training and coaching, etc.

4. The fourth reason is the origination of new services like information and technology-based

services. The production of these services is rapidly rising and showing a whopping growth.

 Where are most of the people employed?

 Most of the output produced in the secondary sector went up by more than nine times than

before. However, the employment rate went up just by three times. Similarly, in the tertiary
 sector, the output produced went up by fourteen times, but the employment rate went up five

times.

 As a result, more than half of the workers in India are employed in the primary sector,

primarily agriculture. However, they are producing only about one-sixth of India’s GDP.

Moreover, the secondary and tertiary sectors employ less than half the people compared to the

primary sector.

 Unemployment : - It is a state where a person seeking employment and is able to work is unable

to find a job.

 Underemployment : - This is the situation of where people are apparently working but all of them

are made to work less than their potential. In this situation more people are engaged in an

activity than required. This kind of underemployment is hidden in contrast to someone who does

not have a job. Hence, it is also called disguised unemployment.

 Seasonal unemployment : - When people are unemployed for a particular season or not getting a

job during a specific period in a year is known as seasonal unemployment.

 How to create employment?

• Granting Loans at lower interest Rate

• Investing in infrastructure such as Building a dam at suitable place.

• Increasing efficiency of transportation and Storage.

• Promoting small scale Industries such as mills, honey collection centers.

• Emphasis on Education and training center.

• Another way to create employment opportunities is to identify, promote, and locate

industries in semi-rural areas.

• Government Welfare Schemes like making well or pump near farms, providing electricity,

building hospitals.

 MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act) 2005 : - Mahatma

Gandhi National Rural Employment Guarantee Act 2005 (MGNREGA) was enacted by the

Government of India considering the provision of the Right to Work. It was implemented in 625

districts in India.

 Under MGNREGA in rural areas, all those who are able to, and are in need of work are

guaranteed 100 days of employment in a year by the government.

 The MGNREGA scheme is open to any rural Indian citizen who is unemployed and above the

age of 18 years.
  The long-term goal of the MGNREGA scheme is to give assets such as roads, wells, and ponds.

The types of work that would in future help to increase the production from land will be given

preference under this Act.

 If, in any case, the government fails to provide employment, the government is obligated to

give unemployment allowances to the people.

 This act is also called the Right To Work because if government fails in its duty to provide

employment, it will provide unemployment allowances to the people.

 Sectors of Indian economy on the basis of working condition : -

1. Organised Sector : -

 The organised sector covers those enterprises or place of work where the terms of employment

are regular and people have assured work. It is called organised because it has some formal

processes and procedures.

 These enterprises are registered by the government and have to follow the rules and

regulations formed under various laws like minimum wages act, factories act etc.

2. Unorganised sector :-

 This sector covers the places of work which is not registered with the government and where

the terms or employment are irregular. This sector is characterized by small and scattered

units which are largely outside the government control and interference.
 Workers in this sector get low wages and there is no provision for overtime and paid holidays etc.

 Organized Sector vs Unorganized Sector :-

Organized Sector Unorganized sector

1. It is a sector in which the job terms are set and 1. The unorganized sector is distinguished by tiny and

consistent, and the employees are guaranteed dispersed units that operate primarily outside of

work. government oversight.

2. They are registered with the government and 2. Rules and regulations exist, but they are not observed

must obey the norms and restrictions outlined in since they are not registered with the government.

different laws such as the Factories Act,

Minimum Wage Act, Payment of Gratuity Act,

Shops and Establishments Act, and so on.

3. The employment is consistent and has set 3. Jobs are generally low-paying and irregular.

working hours. If employees work additional

hours, the company compensates them for the

extra hours worked.

4. Workers benefit from job security. 4. Employment is not guaranteed. People might be asked
to leave for no apparent reason.

5. Employees in the organized sector get a variety 5. There is no provision for overtime, paid leave, holidays,

of additional benefits from their employers, or sick leave, among other things.

including paid leave, holiday pay, a provident

fund, a gratuity, and so on.

6. People are entitled to medical care. The factory 6. In the unorganized sector, there are no such amenities.

manager is responsible for providing amenities

such as drinking water and a safe working

environment. When they retire, these employees

will also receive pensions.

7. Government employees, registered industrial 7. Shop keeping, farming, domestic employment,

workers, Anganwadi workers, village health labouring, rickshaw pulling, and other unorganized

workers, and others are examples of organized industries are examples.

sectors.

 Sectors of Indian Economy on the basis of ownership : -

1. Public Sector : - This sector is owned by government and where the government owns most of

the assets and provides services to the public. For example Indian Railways.

2. Private Sector : - In this sector, ownership of the assets and delivery of services lie in the

hands of individuals or private companies. Eg. - Infosys, TCS etc.

 Public Sector Vs Private Sectors

Public sector Private sector

1. The government controls the majority of the assets 1. Ownership of assets and delivery of services is in the

and provides all services in the public sector. hands of private people or corporations in the private

sector.

2. The public sector provides basis facilities like 2. Privately held enterprises include Tata Iron and Steel

education, food, health and services such as Company Limited (TISCO) and Reliance Industries

railways and post offices. Limited (RIL).

3. The goal of the public sector isn’t only to make 3. Profit is the driving force behind private-sector

money. Its primary goal is public welfare. activities.

Growing Importance of Tertiary Sector

1. Do you think the classification of economic activities into primary, tertiary, and secondary is useful?
Explain how.
Answer: The classification of economic activities into primary, secondary, and tertiary sectors is
helpful as mentioned below :
 It provides information on how and where the people of a country are employed. For example
in India in 2000, the share of the primary sector in employment was about 60 percent e.,
more than other sectors.
 It also helps in ascertaining as to which sector of economic activity contributes more or less to
the country’s GDP and per capita income.
 If the tertiary sector is developing much faster than the primary sector, then it implies that
agriculture is depleting and the government must take measures to rectify this.
 The knowledge that the agricultural profession is becoming unpopular or regressive can only
come if we know which sector it belongs to.
 It provides us information about employment conditions in different sectors. For example in
India, the primary sector faces the problem of disguised unemployment. In this sector, more
people are employed and even if some are removed, production will not be affected.
 It provides us the information about progress in different sectors. For example, the importance
of the tertiary sector has increased due to various factors need for basic services and the
coming of IT services.
In view of the above factors, it is necessary to classify economic activities into three sectors for
smooth economic administration and development.

2. For each of the following sectors that we came across in this chapter why should one focus on

employment and GDP? Could there be other issues which should be examined? Discuss.

For each of the sectors we focus on employment and GDP due to the reasons mentioned below :
a) To know the number of people employed in that sector. For example in 2000, the share of the
primary sector in employment was more than secondary and tertiary sectors.
b) To know the share of each sector in the GDP. For example in 2000, the share of the tertiary
sector was more than that of the agriculture sector and secondary sector in the GDP.
c) By focusing on GDP and employment we can draw conclusions regarding the generation of
new employment opportunities in various sectors and take necessary steps accordingly.
d) We come to know employment conditions for workers such as in the unorganized sector and
take necessary steps to improve their condition. So that the workers are not exploited.

Focus should be laid on other issues such as conditions of work, profit motive, efficiency, public
welfare, environmentally friendly.
a) Conditions of work should be in the favour of workers.
b) The employment should be regular and the employer should follow various laws such as
Factories Act, Minimum Wages Act etc.
 c) The production must be for the welfare of the people who should not be exploited by raising
prices or creating a scarcity of goods in the market. Thus, such issues must be examined while
discussing the role of different sectors in the economy of the country.

3. How is the tertiary sector different from other sectors? Illustrate with few examples.

The tertiary sector is different from other sectors as mentioned below :

(i) The activities of the tertiary sector help in the development of primary and secondary sectors.
(ii)These activities, by themselves, do not produce a good, but they are an aid or support for the
production process. For example, the transport system helps in taking goods from the factory to
markets for the purpose of selling or storing in godown.
(iii) It provides telephones and other products for communication to the traders. Banks
provide money to help production and trade.
(iv) Thus transport, storage, communication etc. are not tertiary activities. On the other
hand, primary sector forms the base for all products that we subsequently make. Minerals and
ores are natural products which are converted into other forms by manufacturing. Sugar is made
from sugarcane.

4. What do you understand by disguised unemployment? Explain with an example each from the

urban and rural areas.

This is the situation of where people are apparently working but all of them are made to work
less than their potential. In this situation more people are engaged in an activity than required.
This kind of underemployment is hidden in contrast to someone who does not have a job. Hence,
it is called disguised unemployment.

For example in rural areas, this type of unemployment is generally found in the agricultural
sector like – in a family of 9 people all are engaged in the same agricultural plot. But if 4
people are withdrawn from it there will be no reduction in output. So, these 4 people are
actually disguised employed.

In urban areas, this type of unemployment can be seen mostly in service sectors such as in a
family all members are engaged in one petty shop or a small business which can be managed by
less number of persons.

5. Distinguish between open unemployment and disguised unemployment.

Open Unemployment – When a country’s labour force do not get opportunities fro adequate
employment, this situation is called open unemployment. This type of unemployment is
generally found in the industrial sector of our country. This is also found among the landless
agricultural labourers in rural areas.
Disguised Unemployment – This is a kind of unemployment in which there are people who are
visibly employed but actually they don’t have full employment. In such a situation more people
 are engaged in a work than required. This type of unemployment is generally found in
unorganized sector where either work is not constantly available or too many people are
employed for the same work that does not require so many hands.

6. Tertiary sector is not playing any significant role in the development of Indian economy. Do you

agree/ Give reasons in support of your answer?

“The tertiary sector is not playing any significant role in the development of Indian economy” is
partially correct due to reasons as mentioned below :

The share of tertiary sector in employment has not increased in proportion to its increase in
production. In 2000, the production in service sector rose by 11 times, whereas employment
has risen less than three times. Therefore, still more than half of the workers in the country are
working in the primary sector.

New services such as based on information technology have become important, but not all the
services of the service sector are growing well. At one end are highly skilled and educated
workers but on the other end, there are a very large number of workers engaged in services such
as small shopkeepers, repair Arsons, transport persons. These persons barely manage to earn a living
and yet they perform these services because no alternative opportunities for work are available to
them. Such persons can not play any important role in the development of the Indian economy. It
is this part of service sector that is not growing in importance.

7. Service sector in India employs two different kinds of people. Who are these?
The service sector in India employs the following two different kinds of people. They are:

(a) The people involved in the services that may directly help in the production of goods. For

example, people involved in the transportation, storage, communication, finance etc.

(b) The people involved in such services that may not directly help in the production of goods e.g.

teachers, doctors, barbers, cobblers lawyers etc. They may be termed as ancillary workers means

those who give services to the primary service providers.

8. Workers are exploited in the unorganized sector. Do you agree with this view.? Give reasons in
support of your answer.
Yes, workers are exploited in the unorganized sector. This would be clear from the following points:
a) There is no fixed number of working hours. The workers normally work 10 – 12 hours without
paid overtime.
b) They do not get other allowances apart fro the daily wages.
c) Government rules and regulations to protect the labourers are not followed there.
d) There is no job security.
e) 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.
f) Being very poor they are always heavily in debt. So, they can be easily made to accept lower wages.
9. How are the activities in the economy classified on the basis of employment conditions?
On the basis of employment conditions, the activities in the economy are classified into organized and
unorganized sectors.

Organized Sector This sector covers those enterprises which are registered by the government and have
to follow its rules and regulations. For example, Reliance Industries Ltd., GAIL etc.

Unorganized Sector It includes those small and scattered units which are largely outside the control of
the government. Though there are rules and regulations but these are never followed here. For example,
casual workers in construction, shops etc. In this sector there is no job security and the conditions of
employment are also very tough.

10. Compare the employment conditions prevailing in the organised and unorganised sectors.
The employment conditions prevailing in the organised and unorganised sectors are vastly different.
The organized sector has companies registered with the government and hence, it offers job security,
paid holidays, pensions, health and other benefits, fixed working hours and extra pay for overtime
work. On the other hand, the unorganised sector is a host of opposites. There is no job security, no
paid holidays or pensions on retirement, no benefits of provident fund or health insurance, unfixed
working hours and no guarantee of safe work environment.

11. Explain the objective of implementing the NREGA 2005.

Answer: See the answer in the NOTES section.

12. Using examples from your area compare and contrast the activities and functions of private and

public sectors.

Private Sector Public Sector

(1) The vegetable shops, grocery shops, sweet shops (1) Mother Dairy booths which sell vegetables, fruits,
etc. are in private sector. 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 good (3) The vegetables and fruits are generally of average
quality. or poor quality.

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

(5) MTNL provides telephone services. There are

(5) The companies like Reliance, Tata, Airtel provide
complaints against their services. On many occasions,
telephone and TV services which are of very good
telephones remain out of order, hut they do not charge
standard.
for that period.

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

(7) The schools run by MCD do not provide quality

(7) Private schools provide education of good quality.
education. Their students are not well-dressed and
Their students are well-dressed and disciplined. Their
disciplined. Their medium of instructions is generally
medium of in structions is always English.
Hindi.
13. Give three examples of Public Sector activities and explain why the government has taken up them.

Answer: The examples are:

Railways: The government has taken up it for the following reasons –
1. Only the government can invest large sums of money on the public project with long
gestation period.
2. To ensure and provide transportation at cheap rate.
NTPC: The government has taken up it to provide electricity at a lower rate than the actual
cost of production. The aim is to protect and encourage the private sector especially small scale
industries.
AIIMS: To provide quality health services at reasonably cheap rate was the main purpose of the
government to start this.

14. Explain how Public sector contributes to the economic development of a nation.

In the following ways Public sector contributes to the economic development of a nation:

a) It promotes rapid economic development through creation and expansion of infrastructure.

b) It creates employment opportunities.
c) It generates financial resources for development.
d) It is ensuring equality of income, wealth and thus, a balanced regional development.
e) It encourages development of small, medium and cottage industries.
f) It ensures easy availability of goods at moderate rates.
g) Contributes to community development i.e. to the Human Development Index (HDI) via health
and educational services.

15. The workers in the unorganised sector need protection on the following issues: wages, safety and

health. Explain with examples?

The workers in the unorganised sector need protection on the following issues: wages, safety and
health. In the construction sector, labourers are employed on a daily basis. Hence, they have no job
security. Here, wages too differ from time to time. Consequently, the government has set up a
minimum wages act to protect such workers from economic exploitation.

The same problem exists for miners working in private mining companies. Their safety is secondary
to the company’s profits, and as a result, many miners suffer grievous injuries (and many a times,
even die) due to inadequate safety gear and norms. Governments of most nations have now laid
down strict rules for private enterprises to ensure workers’ safety.

Most companies in the unorganised sector do not provide health insurance to their employees. Some

of these might be involved in dangerous factory production that may harm a worker’s health in the

long term. These workers need to be protected against the tyranny of the employer, and it is here

that the government steps in.

Multiple Choice Questions

Previous Years’ Questions

1. The sectors are classified into public and private sector on the basis of: [CBSE (CCE) 2011]

(a) Employment conditions

(b) The nature of economic activities

(c) Number of workers employed

(d) Ownership of enterprises

2. The value of all final goods and services produced within a country during a particular year is

called as: [CBSE (CCE) 2011]

(a) Gross Domestic Product (c) National Product

(b) Net Domestic Product (d) Production of Tertiary Sector

3. The service sector includes activities such as [CBSE(CCE)2011]

(a) agriculture, dairy, fishing and forestry

(b) making sugar, gur and bricks

(c) transport, communication and banking

(d) None of these

4. Choose the correct meaning of organised sector [CBSE (CCE) 2011]

(a) It covers those enterprises where the terms of employment are regular.

(b) It is outside the control of the government.

(c) Jobs are not regular.

(d) It provides low salaries.

5. Production of a commodity, mostly through the natural process, is an activity in sector.

(a) primary (b) secondary (c) tertiary (d) information technology

6. GDP is the total value of ………….. produced during a particular year.

(a) all goods and services

(b) all final goods and services

(c) all intermediate goods and services

(d) all intermediate and final goods and services

7. In terms of GDP the share of tertiary sector in 2003 is:

(a) between 20 per cent to 30 per cent

(b) between 30 per cent to 40 per cent

(c) between 50 per cent to 60 per cent

(d) 70 per cent

8. Underemployment occurs when people

(a) do not want to work (c) are working less than what they are capable of doing

(b) are working in a lazy manner (d) are not paid for their work

9. When we produce a good by exploiting natural resources, it is an activity of the

(a) Primary sector (c) Tertiary sector

(b) Secondary sector (d) Unorganised sector

10. Natural products are changed into other forms through ways of manufacturing

(a) Primary sector (c) Tertiary sector

(b) Secondary sector (d) Unorganised sector

11. Which of the following is included in tertiary sector?

(a) ATM booths (b) Call centres (c) Internet cafe (d) All of them

12. Only ………… are included to know the total production in each sector.

(a) Final goods and services (c) Only goods

(b) Intermediate goods (d) Only services

13. At the initial stages of development, ………………. was the most important sector of economic

activity

(a) Primary sector (c) Tertiary sector

(b) Secondary sector (d) Organised sector

14. In the past 100 years, there has been a further shift from secondary to ……………. in

developed countries.

(a) Primary sector (c) Tertiary sector

(b) Organised sector (d) Unorganised sector

15. Mention the largest producing sector in 2003 in India ?

(a) Primary (b) Secondary (c) Tertiary (d) Unorganised sector

16. Name the sector which continues to be the largest employer even in the year 2000.

(a) Secondary (b) Primary (c) Tertiary (d) Banking section

17. A situation in which more persons are employed on a job than are optimally required.

(a) Structural unemployment (c) Cyclical unemployment

(b) Disguised unemployment (d) Seasonal unemployment

18. A study conducted by the planning commission estimates that the following number of jobs

can be created in the education sector alone.

(a) 20 lakhs (b) 15 lakhs (c) 18 lakhs (d) 25 lakhs

19. Out of 200 million children in the school going age group, how many are attending schools?

(a) One – fourth (c) Two – thirds

(b) Half (d) One – fifth

20. According to planning commission, if tourism as a sector is improved, every year we can

give additional employment to people more than

(a) 25 lakhs (b) 30 lakhs (c) 32 lakhs (d) 35 lakhs

21. Central government in India made a law, implementing the Right to Work in how many

districts of India ?

(a) 150 districts (b) 200 districts (c) 250 districts (d) 300 districts

22. Under NREGA 2005, how many days of work, in a year are guaranteed by the government?

(a) 100 days (b) 120 days (c) 90 days (d) 99 days

23. Enterprises or places of work where the terms of employment are regular and people have

assured work comes under

(a) Primary sector (c) Unorganised sector

(b) Organised sector (d) Tertiary sector

24. Percentage of people in the unorganised sector in tertiary sector is …………………..

(a) 67 % (b) 76 % (c) 51 % (d) 75 %

25. In the rural areas, the unorganised sector mostly comprises of

(i) Landless agricultural labourers

(ii) Garment makers

(iii) Street vendors

(iv) Sharecroppers and artisans

(a) (i) and (ii) (c) (iii) and (iv)

(b) (ii) and (iii) (d) (i) and (iv)

26. Which of them does not generally find itself in the unorganised sector ?

(a) Scheduled castes (c) Rich families

(b) Scheduled tribes (d) Backward communities

27. Government owns most of the assets and provides all the.services

(a) Private Sector (c) Organised Sector

(b) Public Sector (d) Tertiary Sector

28. There are large number of activities like providing health and education which are the

primary responsibility of

(a) Primary sector (c) Government

(b) Private companies (d) Secondary sector