CHAPTER 2 SECTORS OF INDIAN ECONOMY (ECONOMICS)

IMPORTANT POINTS FOR REFERENCE

INTRODUCTION – ECONOMY

People are engaged in various activities.

This makes up the different sectors of the economy – primary, secondary and tertiary.

PRIMARY SECTOR

• What is primary sector?

o Activities that are undertaken by directly using natural resources.
o When we produce a good by exploiting natural resources, it is an activity of the
primary sector.
• Why do we need primary sector?
o Primary sector, it forms the base for all other products that we subsequently
make.
o Since most of the natural products we get are from agriculture, dairy, fishing,
forestry, this sector is also called agriculture and related sector.

SECONDARY SECTOR

• The secondary sector covers activities in which natural products are changed into
other forms through ways of manufacturing that we associate with industrial activity.
• This sector gradually became associated with the different kinds of industries that
came up, it is also called the industrial sector.

TERTIARY SECTOR

• These are 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 a
support for the production process.
 • Since these activities generate services rather than goods, the tertiary sector is also
called the service sector.

MGNREGA 2005

• Mahatma Gandhi National Rural Employment Guarantee Act 2005.

• State funded work creation programme.
• Under MGNREGA 2005, all those who can, and need, work in rural areas is
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.
• The types of work that would in future help to increase the production from land will
be given preference under the Act.

ORGANISED SECTOR

• Terms of employment are regular, and people have assured work.

• They are registered by the government and have to follow its rules and regulations
such as the Factories Act, Minimum Wages Act, Payment of Gratuity Act, Shops and
Establishments Act etc.
• Workers in the organised sector enjoy security of employment.
• They are expected to work only a fixed number of hours.
• If they work more, they have to be paid overtime by the employer.
• They get paid leave, payment during holidays, provident fund, gratuity etc., medical
benefits.
• When they retire, these workers get pensions as well.

UNORGANISED SECTOR

• The unorganised sector is characterised by small and scattered units which are
largely outside the control of the government.
• There are rules and regulations but these are not followed.
• No job security.
• Jobs here are low-paid and often not regular.
• There is no provision for overtime, paid leave, holidays, leave due to sickness etc.
• Employment is not secure.
SECTORS IN TERMS OF OWNERSHIP – PUBLIC & PRIVATE

Public Private
Owned by government Owned by private individuals or group
Service motive Profit motive
Eg- Railways Eg- Reliance Industries

WHY DO THE GOVERNMENT SPEND ON ACTIVITIES?

1. There are several things needed by society but which the private sector will not
provide at a reasonable cost. Therefore, governments have to undertake heavy
spending and ensure that these facilities are available for everyone.
2. There are some activities, which the government must support, activities like selling
electricity at the cost of generation, PDS system, etc. Government must bear part of
this cost because-
a. The private sector may not continue their production or business unless the
government encourages it.
b. Many units, especially small-scale units, might have to shut down.
3. There are a large number of activities which are the primary responsibility of the
government. Hence, the government has to spend on this. Ex – health and
education.

RELATION SOCIAL AND ECONOMIC DEVELOPMENT

QUESTIONS WITH ANSWERS

1 MARK QUESTIONS

1. Amrit along with five other members of his family worked as a farmer and produced
50 lakhs tons wheat. Due to some dispute in family two members opted out family
business, but still, they are able to produce 50 lakh tons Wheat. Can you name such
kind of unemployment?

2. If the price of pump-sets went up due to increase in the tax by the government, Profit
of farmers will reduce. This is an example of:
a. Primary sector dependent on Tertiary
b. Secondary sector depend on primary
c. Primary sector depend on secondary
d. Secondary sector depend on tertiary

3. Name one type of classification of the economy.

a. Urban
b. Rural
c. Public/private
d. state/national

4. Where are the employment and non-employment figures taken from to study the
data?
a. Real-Time Handbook of Statistics on Indian Economy.
b. National Statistical Office (NSO)
c. NITI Aayog
d. Statistics information Bureau

5. Ravi is an able-bodied young man. He lives in a village where he cannot find any work.
Under which scheme he can find at least 100 days of work in a year.
a. Aatmanirbhar Bharat Yojana
b. Prdhan Mantri Garib Kalyan Yojana
c. Mahatma Gandhi National Rural Employment Guarantee Act
d. Rural Employment Generation Programme.

6. According to 2017 18 data the share of different sectors in employment in India was
primary sector 44%, secondary sector 25%, treasury sector 31% out of the three
sectors why did the ratio of employment in primary sector high:
 a. Workers in the primary sector are under employed
b. Low job opportunities in secondary sector
c. Efforts of labour are not equivalent in all the sector
d. Outsourcing of job opportunities in secondary sector

2 MARKS QUESTIONS

1. What is secondary sector?

Ans. The secondary sector includes activities in which natural products are changed
into other forms manually or through machines.

2. Why are ‘intermediate goods’ not counted in estimating the GDP?

Ans. This is because the value of final goods already includes the value of all the
intermediate goods that are used in making the final goods. If we count the value of
the intermediate goods, then we would be counting the value of the same things a
number of times.

3 MARKS QUESTIONS

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

4 MARKS QUESTIONS

1. “Agriculture gives boost to the industrial sector “justify the statement with the
relevant point.
Ans. Agriculture gives boost to the industrial sector.
a. Agriculture provides raw materials to industries
 b. Agriculture provides markets for industrial products
c. Agriculture helps boost new industrial products
The industries such as cotton, jute, silk common woollen textiles, sugar etc are based
on agricultural raw material.

5 MARKS QUESTIONS

1. “A small farmer, Laxmi along with four other members in her family, owning about
two hectares of unirrigated land dependent only on rain for growing crops.” Suggest
any five ways to increase her family income.
Ans. To increase the family income of farmers like Laxmi, the following steps can be
taken-
a. The government can spend some money or banks can provide a loan, to
construct a well for her family to irrigate the land.
b. A new dam can be constructed and canals dug to irrigate many farms. This
could lead to a lot of employment generation within the agricultural sector.
c. If the government invests some money in transportation and storage of crops,
or makes better rural roads so that mini-trucks reach everywhere several
farmers can continue to grow and sell these crops.
d. If the local bank gives her credit at a reasonable rate of interest, she will be
able to buy all these in time and cultivate her land.
e. Identify, promote and locate industries and services in semi-rural areas where
a large number of people may be employed. For eg. Setting up a dal mill.

2. How can we create more employment in secondary and tertiary sectors in rural
India?
Ans. We can create more employment in secondary and tertiary sectors in rural India
in the following ways:
a. 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.
b. 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.
 c. Providing credit at a reasonable rate of interest to help farmers buy seeds,
fertilisers, agricultural equipments, pumpsets etc. can generate employment
in rural banking.
d. 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.
e. 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.

3. Explain reasons for the rising importance of the tertiary sector in India.
Ans. Tertiary sector or service sector plays a very significant role and its importance
is rising day by day:
a. Greater the development of primary sector and secondary sector more would
be the demand for Services.
b. 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.
c. Even development of agriculture and industry leads to the development of
services such as transport, trade and storage, etc.
d. 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.
e. 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.

4. Under employment continues two be rampant in the rural areas. Suggest the ways
through which employment for rural people can be generated.
Ans. There are few methods for implement generation:
a. People can be employed in projects like construction of a dam / canal/ roads
in the village
b. Government invest and employ people in providing transportation and storage
services
c. People can be employed in service like banking trade etc
d. Government can identify, promote industries and services in semi-rural areas
to enhance employment