SECTORS OF INDIAN ECONOMY

1. How is the tertiary sector different from other sectors? Illustrate with a few examples.
Solution : The tertiary sector different from the other two sectors. This is because the other two
sectors produce goods but, this sector produces services rather than goods.
The activities under this sector help in the development of the primary and secondary sectors.
Therefore, it is also known as the service sector. These services are an aid or support for the
production process.
For example, goods produced in the primary or secondary sector use transportation service for
movements of goods from one place to another, banking and communication services to deal with
payment for goods, etc. Similarly, doctors, teacher, lawyers, tailor, etc., come under the tertiary
sector as they provide services rather than material goods.
In recent times, certain new services based on information technology such as internet cafe, ATM
booths, call centers, software companies etc have become important.
2. Distinguish between open unemployment and disguised unemployment.
Solution :
Open Unemployment Disguised unemployment
This is a kind of unemployment in which there are people
When a country’s labour force does not get
who are visibly employed but actually they don’t have full
opportunities for adequate employment, this
employment. In such a situation more people are engaged in
situation is called open unemployment.
work than required.
This type of unemployment is generally found in This type of unemployment is generally found in
the industrial sector of our country. This is also unorganized sector where either work is not constantly
found among the landless agricultural labourers available or too many people are employed for the same
in rural areas. work that does not require so many hands.
This kind of unemployment exists due to lack of The absence of alternative employment opportunities leads
resources. to this situation.

3. 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:

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

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

4. 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.
 5. What are final goods and intermediate goods? How do they help in calculating (GDP) Gross
Domestic Product?

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.
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,
Three ways to solve the problem of underemployment:
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.
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.
If local banks give credit to farmers at a reasonable rate of interest, they will be able to buy
agricultural inputs and increase productivity.
Centres for vegetables and fruit processing, health centres, educational institutions, tourism
and IT centres will certainly help in creating jobs.
7.How can we create more employment in secondary and tertiary sectors in rural India?
Answer:
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.
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.
Providing credit at a reasonable rate of interest to help farmers buy seeds, fertilisers, agricultural
equipments, pumpsets etc. can generate employment in rural banking.
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.
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.

8. Explain the importance of the service sector.

Or
Explain reasons for the rising importance of the tertiary sector in India.
Tertiary sector or service sector plays a very significant role and its importance is rising day by day:
Greater the development of primary sector and secondary sector more would be the demand for
Services.
 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.
Even development of agriculture and industry leads to the development of services such as
transport, trade and storage, etc.
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.
New services like Information Technology and outsourcing have become very important for modem
day trade and industry.
9. Explain with suitable examples how public sector contributes to the economic development of the nation.

Role of Public sector in economic development. The Public sector is that sector of the
economy in which the government owns most of the assets and provides all the services,
e.g., railways, post and telegraph.
It promotes rapid economic development through creation and expansion of infrastructure.
The public sector provides various services and facilities like construction of roads, bridges,
railways, irrigation through dams, etc. where heavy spending is required.
A large number of activities are a primary responsibility of the government like schools,
hospitals, housing, safe drinking water, etc.
Certain activities are meant to be supported by the government, like providing electricity to
small scale industries at low prices, supply of food to the poor, etc. It encourages
development of small, medium and cottage industries.
It ensures availability of goods and services at moderate rates and also contributes to
community development through creation and expansion of infrastructure.