Chapter - 2

(Economics)
SECTORS OF
THE INDIAN
ECONOMY
Economics Activity

Primary Secondary
Secondary
Sector Sector
Sector

Tertiary
Sector

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 Primary Sector
• When the economic activity
depends mainly on exploitation
of natural resources then that
activity comes under the
primary sector.
• Agriculture and agriculture
related activities are the
primary sectors of economy.
• Ex: Farming, forestry, hunting,
fishing and mining.

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 Secondary Sector
• When the main activity involves
manufacturing then it is the secondary
sector.
• All industrial production where
physical goods are produced come
under the secondary sector.
• It is the next step after primary. Some
manufacturing processes are
required here. It is also called the
industrial sector.
• For example, using cotton fibre from
the plant, we spin yarn and weave
cloth. Using sugarcane as raw
material, we make sugar or gur.
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 Tertiary Sector
• Tertiary sector includes activities
that help in the development of the
primary and secondary sectors.
• These activities, by themselves, do
not produce a good but they are an aid
or support for the production process.
• It is also called the service sector.
• Example: Teachers, doctors,
washermen, barbers, cobblers,
lawyers, call centres,
software companies, etc..
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 Comparing the
‘Three’ Sectors

Primary – Secondary – Tertiary

 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.
• The sum of production in the three sectors
gives Gross Domestic Product (GDP) of a
country.
• GDP is the value of all final goods and
services produced within a country during a
particular year.
• It shows how big the economy is. In India,
the task of measuring GDP is undertaken by
a central government ministry.
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Comparing the ‘Three’
Sectors
Primary – Secondary –
Tertiary

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The tertiary sector has become important in India because of the
following reasons:
• Services such as hospitals, • With the rise in the income of
educational institutions, post and people, they start demanding more
telegraph services, police stations, services like eating out, tourism,
courts, village administrative shopping, private hospitals,
offices, municipal corporations, private schools, professional
defence, transport, banks, insurance training, etc.
companies, etc. are considered as
basic services and are necessary for • Over the past decade, certain new
all people. services based on information and
communication technology have
• The development of agriculture become important and essential.
and industry leads to the
development of services such as
transport, trade, storage, etc.
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Where are Most People Employed?

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 The meaning of this finding is…
• Majority of people are still employed • Secondary and Tertiary Sector
in agricultural activities. have failed to generate enough
employment opportunities
• As agriculture provides seasonal making a pressure on primary
employment during cropping season so sector.
chances of hidden employment are big.
• Although educated and skilled
• Moreover, as history suggests a workforce do get employed in
developed nation’s dependency shifts secondary and tertiary sector
from primary sector towards tertiary but for unskilled and semi-
sector in all aspects of economic skilled workers there is still
development, so it can be said that shortage of employment
India is still way behind because avenues.
majority still depend on agriculture.

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How to Create More
Employment?
 How to Create More Employment?
• Away by which we can tackle this • We must realize that some of the
problem is to identify, promote and suggestions discussed above would
locate industries and a large number take a long time to implement.
of people may be employed.
• Recognizing this, the central
• A study conducted by the Planning government in India made a law
Commission estimates that nearly implementing the Right to Work.
20 lakh jobs can be created in the
education sector alone. • The same study by the Planning
Commission says that if tourism as
• Every state or region has the a sector is improved, every year
potential for increasing the we can give additional
income and employment for employment to more than 5 lakh
people in that area. people.

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Mahatma Gandhi National Rural Employment
Guarantee Act (MGNREGA) 2005

• The central government in India made

a law implementing the Right to
Work in about 625 districts of India.
• Under MGNERGA 2005, all those
who are able to, and are in need
of, work are 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.
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Other Classifications
of Economy
 Organised Sector
• It is a sector where the employment
terms are fixed and regular, and the • The job is regular and has fixed
employees get assured work. working hours. If people work
more, they get paid for the overtime
• They are registered by the government by the employer.
and have to follow its rules and • Workers enjoy the security
regulations, which are given in various of employment.
laws such as the Factories Act, Minimum
Wages Act, Payment of Gratuity Act, • People working in the organised
Shops and Establishments Act, etc. sector get several other benefits
from the employers such as paid
• People get medical benefits. The factory
leave, payment during holidays,
provident fund, gratuity, etc.
manager has to ensure facilities like
drinking water and a safe working • Examples of the organised sectors
environment. When they retire, these are Government employees,
workers get pensions as well.
registered industrial workers,
Anganwadi workers, village health
workers, etc.
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 Unorganised Sector
• The unorganised sector is characterised • Employment is not secure. People can
by small and scattered units, which are be asked to leave without any reason.
largely outside the control of the
government. • There is no provision for overtime,
paid leave, holidays, leave due to
• There are rules and regulations but sickness, etc.
these are not followed since they are
not registered with the government. • Examples of the unorganised sectors
are Shopkeeping, Farming, Domestic
• Jobs are low-paid and often not works, Labouring, Rickshaw
regular. pulling, etc.
• There are no such facilities in
the
unorganised sector.

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 How to Protect Workers in
Unorganised Sector?
• There is a need for protection • Government can provide cheap and
and support of the workers in the affordable basic services like
unorganised sector. education, health, food to these
workers.
• Here are a few points which will
help in doing so. • The government can frame new
laws which can provide provision
• The government can fix the for overtime, paid leave, leave
minimum wages rate and working due to sickness, etc.
hours.
• The government can provide cheap
loans to self-employed people.

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Sectors in Term of
Ownership
 Public Sector
• In the public sector, the
government owns most of
the assets and provides all
the services.
• Railways or post
office is an example
of the public sector.
• The purpose of the public
sector is not just to earn
profits. Its main aim is
public welfare.
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 Private Sector
• In the private sector, ownership of
assets and delivery of services is in
the hands of private individuals or
companies.
• Companies like Tata Iron and Steel
Company Limited (TISCO) or
Reliance Industries Limited (RIL)
are privately owned companies.
• Activities in the private sector are
guided by the motive to earn
profits.
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Responsibilities
of
Government
 Responsibilities of Government
• Government raises money through taxes • The government in India buys wheat and
and other ways to meet expenses on the rice from farmers at a ‘fair price’ and sells
services rendered by it. at a lower price to consumers through
ration shops. In this way, it supports both
• Governments have to undertake heavy farmers and consumers.
spending such as the construction of
roads, bridges, railways, harbours, • Running proper schools and providing
generating electricity, providing quality education, health and education
irrigation through dams, etc. Also, it has facilities for all are some of the duties of
to ensure that these facilities are the government.
available for everyone.
• Government also needs to pay attention to
• There are some activities, which the aspects of human development such as
government has to support to encourage availability of safe drinking water,
the private sector to continue their housing facilities for the poor and food
production or business. and nutrition, taking care of the poorest
and most ignored regions of the country.

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