ECONOMICS CHAPTER 2 – SECTORS OF THE INDIAN ECONOMY

INTRODUCTION:

Sectors are groups of activities resulting in the production of commodities or services. Economic
activities are those that result in revenue and profit.

DIFFERENT SECTORS OF THE INDIAN ECONOMY:

1. Primary Sector: The primary sector is when we make a product by extracting and collecting natural
resources. Farming, forestry, hunting, fishing, and mining are just a few examples.

2. Secondary Sector: It includes activities that transform natural goods into new forms through various
manufacturing processes. The industrial sector is another name for it. For example, we spin yarn and
make cloth from the plant's cotton fibre.

3. Tertiary Sector: Activities that help in the growth of the primary and secondary sectors are included
in the tertiary sector. These actions do not generate a good in and of itself, but they help or support the
production process. It's also known as the service sector. Teachers, doctors, washermen, barbers,
cobblers, lawyers, call centres, software businesses, and so on are some examples.

4.All three sectors, primary, secondary, and tertiary, are interdependent and interconnected inthe day-
to-day performance of diverse economic activities.

Gross Domestic Product (GDP): The value of all of the final goods and services produced by all three
sectors makes the GDP.

Historical Changes in Sectors:

1. The primary sector was the most important sector of economic activity in a country throughout its
early phases of development.

2. The agriculture sector began to generate significantly more food than before as a result of
technological advancements in farming processes.

3. People began working in factories. Some persons are also involved in the transportation industry.

4. The secondary sector gradually became the most important in terms of the economy and
employment.

5. A great variety of industries relating to food processing, equipment manufacturing, and textiles are
present.

6. This resulted in the establishment of services such as banking, health care, and education.

7. In terms of total production, the service industry has overtaken manufacturing as the most
significant sector, and it has begun to employ more people.

The tertiary sector in India has been increasingly important for the following reasons:
1. Hospitals, educational institutions, post and telegraph services, police stations, courts, village
administrative offices, municipal corporations, defence, transportation, banks, insurance businesses,
and other services are considered vital for everyone.

2. Agriculture and industry expansion lead to the expansion of services such as transportation,
commerce, and storage.

3. As people's incomes rise, they expect more luxuries like dining out, tourism, shopping, private
hospitals, private schools, professional training, and so on.

4. During the recent decade, several new information and communication technology-based services
have become increasingly important and indispensable.

Disguised Unemployment: It can apply to any group of people that aren't working to their full
potential. When more number of people are employed that what is required , the extra workers can be
termed as disguised unemployed.

Seasonal Unemployment: A type of Unemployment where people are employed for a particular
season of the year and get unemployed for the rest of the year.It is mostly found in the agriculture
sector.

Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA):

• It is primarily for persons who live in rural areas who are able and willing to work. Every year, the
MGNREGA gives at least 100 days of work to rural household.

• The MGNREGA scheme is open to any Indian citizen over the age of 18 who lives in a rural area.

• Another goal of the MGNREGA act is to give rural communities long-term assets such as roads, wells,
and ponds.

• If the government fails to produce jobs, the people will be forced to rely on unemployment benefits.

• It is implemented without the use of contractors or agents in gram panchayats.

• This law aids in the preservation of the village environment, the empowerment of rural women, the
promotion of social equality, the reduction of migration to urban regions, and the provision of essential
services, among other things.

DIFFERENCE BETWEEN ORGANISED AND UNORGANISED SECTOR:

ORGANISED SECTORS UNORGANISED SECTOR

Provides fixed and secure employment, Government has little influence over this
with work based on motivation and sector.
qualifications.
Adheres to government norms and Workers do not have the same level of job
regulations. security as those in the organised sector.

Employees have job security Overtime work is not compensated

Employment terms are fixed, regular, and Consists of small, scattered units largely
employees receive assured work. outside government control.

Registered with the government and must Rules and regulations exist but are often not
adhere to laws, rules, and regulations (e.g., followed due to lack of registration
 Factories Act, Minimum Wages Act).

Fixed working hours with overtime pay Jobs are low-paid, irregular, and lack fixed
provided by the employer working hours
Provision for paid leave, holidays, No provision for overtime, paid leave,
provident fund, gratuity, etc. holidays, or sick leave.

Employees receive medical benefits, and No such facilities or benefits are provided.
facilities like drinking water and a safe
working environment are ensured. Retirees
receive pensions.

HOW TO PROTECT WORKERS IN UNORGANISED SECTOR?

There is a need for workers in the unorganised sector to be protected and supported. Here are a few
pointers to get you started.

• The government has the authority to set the minimum pay and working hours.

• Self-employed workers can get low-cost loans from the government.

• The government can supply these workers with low-cost, accessible fundamental amenities such as
education, health care, and food.

• The government can enact new legislation that allows for overtime, paid leave, and sick leave, among
other things.

DIFFERENT SECTORS IN TERMS OF OWNERSHIP:

PUBLIC SECTOR PRIVATE SECTOR

The government controls most assets and is Asset ownership and service delivery are in the
responsible for all services in the public hands of private individuals or corporations.
sector.
The public sector's goal isn't only to make Profit is the primary motivator for private sector
money; its main goal is to benefit the activity
general population.
The public sector includes entities like Tata Iron and Steel Company Limited (TISCO)
railways and post offices and Reliance Industries Limited (RIL) are
examples of private companies

Government Responsibilities:

The government is responsible for many key activities, including:

1. Funding Services: The government raises money through taxes and other means to cover the costs of
its services.

2. Infrastructure Development: It undertakes major spending on building roads, bridges, railways,

harbours, generating electricity, and providing irrigation through dams. It ensures these facilities are
accessible to everyone.
3. Supporting the Private Sector: The government supports certain activities to encourage private
sector production and business.

4. Subsidising Essentials: In India, the government buys wheat and rice from farmers at fair prices and
sells them at lower rates through ration shops to support both farmers and consumers.

5. Providing Essential Services: The government is responsible for running schools, offering quality
education, and providing health services for all.

6. Human Development: It also focuses on human development aspects such as safe drinking water,
housing for the poor, food and nutrition, and addressing the needs of the most neglected.