Sectors of the Indian Economy

Complete the above table to show how sectors are dependent on each other.

Answer

Explain the difference between primary, secondary and tertiary sectors using examples other than those mentioned in the text.

Answer

Classify the following list of occupations under primary, secondary and tertiary sector.

• Tailor
• Basket weaver
• Flower cultivator
• Milk vendor
• Fishermen
• Priest
• Courier
• Workers in match factory
• Moneylender
• Gardener
• Potter
• Bee-keeper
• Astronaut
• Call centre employee

Answer

Students in a school are often classified into primary and secondary or junior and senior. What is the criterion that is used? Do you think this is a useful classification? Discuss.

Answer

The classification of students into primary and secondary or junior and senior levels is typically based on the class they are reading in:

• Primary — Kindergarten to 5^th
• Secondary — 6^th to 8^th
• Senior — 9^th to 12^th

Yes I can consider this classification to be a useful and practical approach because of the following reasons:

1. It helps in structuring the curriculum according to the age of the students allowing gradual increase in subject complexity.
2. Efficiently distributes resources. For example, primary schools may focus on play-based learning environments, while secondary schools may need laboratories for specialised subjects.
3. Helps in designing age-appropriate assessments and graduation requirements.
4. Separating younger and older students helps in creating a safer and more supportive environment for younger children.

What does the history of developed countries indicate about the shifts that have taken place between sectors?

Answer

The history of developed countries indicates that there have been significant shifts between economic sectors over time. Initially, the primary sector (agriculture and natural resource extraction) was the most important, with most people employed in this sector. As agricultural methods improved, food production increased, allowing people to engage in other activities, leading to a rise in crafts, trade, and other services.

Over a long period, particularly with the advent of new manufacturing methods, the secondary sector (industrial manufacturing) became dominant. People who had worked in agriculture moved to factory jobs, making the secondary sector the most important in terms of production and employment.

In the past 100 years, there has been a further shift from the secondary to the tertiary sector (services) in developed countries. The service sector has become the most important for total production and employment. Thus, the pattern observed is a progression from primary to secondary to tertiary sectors as economies develop.

Correct and arrange the important aspects for calculating GDP from this Jumble.

To count goods and services we add the numbers that are produced. We count all those that were produced in the last five years. Since we shouldn’t leave out anything we add up all these goods and services.

Answer

To calculate GDP, use the values of goods and services rather than quantities, and count only final goods to avoid double counting. Sum the annual production values of all sectors. GDP reflects the total value of final goods and services produced within a country yearly.

Discuss with your teacher how you could calculate the total value of a good or service by using the method of value added at each stage.

Answer

The value-added approach allows us to estimate the total value of a good or service by considering the value added at each stage of production. At every production stage, we calculate the difference between the value of a firm’s output and the value of goods and services it purchases from other firms. This difference represents the value added by that stage of production.

Answer the following questions by looking at the graph:

1. Which was the largest producing sector in 1973-74?
2. Which is the largest producing sector in 2013-14?
3. Can you say which sector has grown the most over forty years?
4. What was the GDP of India in 2013-14?

Answer

1. Primary sector
2. Tertiary sector
3. Tertiary sector
4. The GDP figure in 2013 was Rs 56,00,000 crores.

Complete the table using the data given in Graphs 2 and 3 and answer the question that follows. Ignore if data are not available for some years.

Share of Primary Sector in GDP and employment

What are the changes that you observe in the primary sector over a span of forty years?

Answer

Share of Primary Sector in GDP and employment

Over a span of forty years, the share of primary sector has decreased in GDP as well as in employment but still it is the largest employer. The employment percentage has not changed in the same proportion.

Choose the correct answer:

Underemployment occurs when people

1. do not want to work
2. are working in a lazy manner
3. are working less than what they are capable of doing
4. are not paid for their work

Answer

are working less than what they are capable of doing

Compare and contrast the changes in India with the pattern that was observed for developed countries. What kind of changes between sectors were desired but did not happen in India?

Answer

In developed countries, the economy grew in a logical way: first, the primary sector (like farming) grew, then the secondary sector (like manufacturing), and finally the tertiary sector (like services). Jobs grew in these sectors as the economy developed.

India's case is different. In India, the primary sector grew, but instead of the secondary sector growing next, it was the tertiary sector that expanded. However, jobs in the secondary and tertiary sectors did not grow as quickly. As a result, many people still work in the primary sector, which has a problem of underemployment.

Why should we be worried about underemployment?

Answer

We should be worried about underemployment because it indicates economic inefficiency and reduced productivity. In India, many workers are stuck in low-productivity agricultural jobs, contributing little to the GDP. This hidden unemployment means their potential is not fully utilized. Underemployment leads to lower incomes, poor living standards, and perpetuates poverty. It highlights the need for better job creation in the secondary and tertiary sectors to provide more productive and meaningful employment opportunities.

Why do you think MGNREGA 2005 is referred to as ‘Right to work’ ?

Answer

MGNREGA 2005, also known as the Mahatma Gandhi National Rural Employment Guarantee Act, is often called the ‘Right to Work’ because it guarantees at least 100 days of wage employment in a financial year to eligible rural households. Any adult member willing to do unskilled manual work has the right to demand employment under this program. If employment isn’t provided within 15 days of applying, applicants are entitled to an unemployment allowance.

Imagine that you are the village head. In that capacity suggest some activities that you think should be taken up under this Act that would also increase the income of people? Discuss.

Answer

As the village head, I’d recommend the following activities under the MGNREGA that can both generate income and contribute to community development:

1. Constructing check dams, ponds, and percolation tanks to conserve rainwater. Digging wells or rejuvenating existing ones to improve water availability.
2. Establishing community forests for sustainable wood and non-timber forest products and planting fruit-bearing trees, timber species, and medicinal plants.
3. Installing solar panels for electricity generation.

How would income and employment increase if farmers were provided with irrigation and marketing facilities?

Answer

Irrigation and marketing facilities enhance agricultural productivity, income, and employment, benefiting both farmers and the overall economy. Irrigation facilities allow farmers to cultivate crops throughout the year, reducing dependence on rainfall. With consistent water supply, farmers can grow multiple crops, leading to higher yields and increased income. Similarly, marketing facilities enable farmers to sell their produce efficiently. Better access to markets means higher/ fair prices for their crops, directly impacting income.

In what ways can employment be increased in urban areas?

Answer

Employment can be increased in urban areas by the following ways:

1. Encourage the establishment of small-scale industries within cities.
2. Facilitate access to loans for setting up businesses.
3. Provide necessary infrastructure.

Look at the following examples. Which of these are unorganised sector activities?

(i) A teacher taking classes in a school

(ii) A headload worker carrying a bag of cement on his back in a market

(iii) A farmer irrigating her field

(iv) A doctor in a hospital treating a patient

(v) A daily wage labourer working under a contractor

(vi) A factory worker going to work in a big factory

(vii) A handloom weaver working in her house

Answer

Out of the given examples, the unorganised sector activities are:

(ii) A headload worker carrying a bag of cement on his back in a market

(iii) A farmer irrigating her field

(v) A daily wage labourer working under a contractor

(vii) A handloom weaver working in her house

Talk to someone who has a regular job in the organised sector and another who works in the unorganised sector. Compare and contrast their working conditions in all aspects.

Answer

People working in either organised sector or unorganised sector are earning money but there are many differences in their working conditions and other facilities.

How would you distinguish between organised and unorganised sectors? Explain in your own words.

Answer

Organised and unorganised sectors have following major differences:

1. The organized sector includes businesses, industries, and enterprises that are registered with the government while the unorganized sector comprises small-scale enterprises or units that are not registered with the government.
2. Employees in organised sector have fixed employment terms and regular work while employment terms are irregular and not fixed in case of unorganised sector.
3. Their is job security, perks and other benefits in organised sector while such facilities are not available in unorganised sector.

The table below shows the estimated number of workers in India in the organised and unorganised sectors. Read the table carefully. Fill in the missing data and answer the questions that follow.

Workers in different sectors (In millions)

• What is the percentage of people in the unorganised sector in agriculture?
• Do you agree that agriculture is an unorganised sector activity? Why?
• If we look at the country as a whole, we find that ............... % of the workers in India are in the unorganised sector. Organised sector employment is available to only about ...............% of the workers in India.

Answer

Workers in different sectors (In millions)

• 99.5% of people in the unorganized sector work in agriculture.
• Agricultural activities involve a large number of small-scale farmers, labourers, and workers. These individuals often operate independently or in small family units, lacking formal organisation or structured management. This makes agriculture an unorganised sector.
• If we look at the country as a whole, we find that 82.73 % of the workers in India are in the unorganised sector. Organised sector employment is available to only about 17.26% of the workers in India.

Fill in the blanks using the correct option given in the bracket:

(i) Employment in the service sector ............... increased to the same extent as production. (has / has not)

(ii) Workers in the ............... sector do not produce goods. (tertiary / agricultural)

(iii) Most of the workers in the ............... sector enjoy job security. (organised / unorganised)

(iv) A ............... proportion of labourers in India are working in the unorganised sector. (large / small)

(v) Cotton is a ............... product and cloth is a ............... product. (natural /manufactured)

(vi) The activities in primary, secondary and tertiary sectors are............... (independent / interdependent)

Answer

(i) Employment in the service sector has not increased to the same extent as production.

(ii) Workers in the tertiary sector do not produce goods.

(iii) Most of the workers in the organised sector enjoy job security.

(iv) A large proportion of labourers in India are working in the unorganised sector.

(v) Cotton is a natural product and cloth is a manufactured product.

(vi) The activities in primary, secondary and tertiary sectors are interdependent

The sectors are classified into public and private sector on the basis of:

1. employment conditions
2. the nature of economic activity
3. ownership of enterprises
4. number of workers employed in the enterprise

Answer

ownership of enterprises

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

1. primary
2. secondary
3. tertiary
4. information technology

Answer

primary

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

1. all goods and services
2. all final goods and services
3. all intermediate goods and services
4. all intermediate and final goods and services

Answer

all final goods and services

In terms of GDP the share of tertiary sector in 2013-14 is between ............... per cent.

1. 20 to 30
2. 30 to 40
3. 50 to 60
4. 60 to 70

Answer

60 to 70

Match the following:

Answer

Find the odd one out and say why.

1. Tourist guide, dhobi, tailor, potter
2. Teacher, doctor, vegetable vendor, lawyer
3. Postman, cobbler, soldier, police constable
4. MTNL, Indian Railways, Air India, Jet Airways, All India Radio

Answer

1. The potter is the odd one out. A potter is a secondary sector worker whereas the others are tertiary sector workers or service providers.
2. The vegetable vendor is the odd one, because he is not skilled while the others are skilled workers.
3. The cobbler is the odd one, because he works in the unorganized sector.
4. Air India (recently acquired by TATA) and Jet Airways (now bankrupt) are the odd ones as they are private sector enterprises.

A research scholar looked at the working people in the city of Surat and found the following.

Complete the table. What is the percentage of workers in the unorganised sector in this city?

Answer

The percentage of workers in the unorganised sector in this city is 70%.

Do you think the classification of economic activities into primary, secondary and tertiary is useful? Explain how.

Answer

The classification of economic activities into primary, secondary, and tertiary sectors provides a useful framework for understanding the structure of an economy. It makes easier for us to prepare data about production, growth etc., which in turn can be used to asses economy of the country. This classification helps policymakers, researchers, and businesses analyze economic trends, allocate resources, and design targeted policies.

For each of the 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.

Answer

Focusing on employment and GDP is crucial when analyzing different sectors of an economy due to their direct impact on economic growth, productivity, and overall well-being of the population. They are internationally acclaimed parameters to asses development of a country. However, there are other important issues that should be examined alongside the given parameters to gain a comprehensive understanding of a sector's impact and performance. For example: Distribution of income, Quality of job (i.e. according to qualifications of an individual); and development related to ecological issues, sustainability and pollution etc. Assessment of quality of life is also required.

Make a long list of all kinds of work that you find adults around you doing for a living. In what way can you classify them? Explain your choice.

Answer

• I can find a lot of service providers like delivery boys, cab drivers, vegetable vendors, car-service centres, hospitals, schools, banks etc. All these come under tertiary sector. They may or may not assist in production of goods but provide us with different services.
• I can also find people working in factories, food processing industries and garment manufacturing units. All these come under 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.
• There are some adults who work in dairy farms and agricultural fields. They work in primary sector as they produce goods by exploiting natural resources.

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

Answer

The activities that help in the development of the primary and secondary sectors comprise the tertiary sector. These activities, by themselves, do not produce any goods but they are an aid or a support for the production process. For example, goods that are produced in the primary or secondary sector would need to be transported by trucks or trains and then sold in wholesale and retail shops. Here transportation forms the tertiary sector. Tertiary sector or service sector also includes some essential services that may not directly help in the production of goods. For example, we require teachers, doctors, and those who provide personal services such as washermen, barbers, cobblers, lawyers etc. They are different from primary sector that produces goods using the natural resources and manufacturing sector or secondary sector that involves production of goods using the raw material produced by primary sector.

What do you understand by disguised unemployment? Explain with an example each from the urban and rural areas.

Answer

Disguised unemployment refers to a situation where more people are engaged in a task or occupation than are actually required for its efficient functioning. It often occurs in both rural and urban areas. Disguised unemployment leads to inefficiency, under-utilization of labour, and reduced overall productivity.

Example from rural area : Imagine a small family farm where five people work together to cultivate crops. However, the land is not large enough to require all five workers for efficient production. If two of these workers leave the farm for some other job, productivity remains the same and family income increases.

Example from urban area : A small retail shop in a crowded market with six salespersons to attend to customers while the need is of only three persons is an example of disguised unemployment.

Distinguish between open unemployment and disguised unemployment.

Answer

“Tertiary sector is not playing any significant role in the development of Indian economy.” Do you agree? Give reasons in support of your answer.

Answer

No, I don't agree that tertiary sector is not playing any significant role in the development of Indian economy. Also known as the service sector, it is very crucial for India’s economic growth due to following reasons:

• The tertiary sector contributes substantially to India’s GDP.
• This sector alone provides approximately 31% of overall employment in India.
• The tertiary sector offers a wide range of services, including IT services, consulting, healthcare, education, finance and tourism. These services play a vital role in our daily life.

Service sector in India employs two different kinds of people. Who are these?

Answer

Service sector in India employ two different kinds of people — Skilled and Unskilled. Few services employ highly skilled and educated workers like teachers, doctors and lawyers while in other services there are a very large number of workers who are unskilled. For example, those engaged in services such as running small shops, repair persons, transport persons, etc.

Workers are exploited in the unorganised sector. Do you agree with this view? Give reasons in support of your answer.

Answer

Yes, I agree that workers are exploited in the unorganised sector. The unorganized labour sector in India faces several challenges, leading to exploitation of workers. Following are the reasons :

• Many unorganised labourers work on a daily wage basis, with no guarantee of consistent employment.
• Earnings in the informal sector are typically lower than those in the formal sector. This income disparity often leaves unorganized labourers struggling to make ends meet, contributing to persistent poverty and income inequality.
• Workers in the unorganized sector typically lack legal protections such as minimum wages, social security benefits, and regulated working hours. This absence leaves them vulnerable to exploitation by employers who may pay below minimum wage or ignore safety standards.

How are the activities in the economy classified on the basis of employment conditions?

Answer

On the basis of employment conditions, activities in the economy are classified as :

1. Organized —
   • The organized sector provides job security and formal employment arrangements.
   • Workers in this sector often receive benefits such as health insurance, retirement plans, and paid leave.
   • Example: Corporate offices, government departments, large companies, and registered businesses.
2. Unorganized —
   • The unorganized sector is characterized by lower wages compared to the organized sector.
   • Workers here often lack stable employment contracts and face uncertainty.
   • Example: Street vendors, daily wage labourers, small-scale enterprises, and informal workers.

Compare the employment conditions prevailing in the organised and unorganised sectors.

Answer

Explain the objective of implementing the MG NREGA 2005.

Answer

The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), enacted in 2005, has following objectives:

1. All those who are able to, and are in need of work in rural areas are guaranteed 100 days of employment in a year by the government.
2. If the government fails in its duty to provide employment, it gives unemployment allowances to the people.

Using examples from your area compare and contrast that activities and functions of private and public sectors.

Answer

Public Sector: Public sector organizations are owned, controlled, and managed by the government or other state-run bodies. Examples include government agencies, state-owned enterprises, and local government authorities.

• The primary motive of public sector organizations is to engage in activities that serve the general public.
• Funding for public sector undertakings comes from government.
• Public sector units provide benefits like job security, housing facilities, allowances, and retirement benefits etc.

Private Sector: Private sector enterprises are owned, controlled, and managed by individuals, groups, or business entities. They aim to earn profits from their business operations.

• Private sector units raise capital through owners, loans, shares, and debentures.
• Private sector units offer benefits like higher salaries, promotion opportunities, competitive environments, and incentives.
• Examples: ICICI Bank, HDFC Bank, and Kotak Mahindra Bank are private sector banks.

Discuss and fill the following table giving one example each from your area.

Answer

Give a few examples of public sector activities and explain why the government has taken them up.

Answer

A few examples of public sector activities and the reasons for government taking it up are given below:

1. Indian Railways — Indian Railways is one of the largest rail networks in the world and is operated by the Ministry of Railways. The government has taken up this activity to provide affordable and accessible transportation for people and goods across the country. It helps in connecting remote areas, promoting trade and commerce, and supporting the movement of the population.
2. Public Sector Banks — Banks like the State Bank of India (SBI) and Punjab National Bank (PNB) are owned and operated by the government. The government operates these banks to ensure financial inclusion, provide credit to priority sectors such as agriculture and small businesses, and maintain financial stability in the economy.
3. Food Corporation of India (FCI) — The FCI is responsible for procuring, storing, and distributing food grains to ensure food security. The government manages this to stabilize food prices, ensure a stable supply of essential food items, and support farmers by guaranteeing a minimum support price (MSP) for their produce.
4. National Health Mission (NHM) — The NHM encompasses various programs to improve healthcare services across India, particularly in rural and underserved areas. The government has undertaken this initiative to ensure that all citizens have access to basic healthcare services, reduce health disparities, and improve overall public health outcomes.

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

Answer

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

1. The purpose of the public sector is not just to earn profits. Governments raise money through taxes and other ways to meet expenses on the services rendered by it. For example, selling electricity at the cost of generation may push up the costs of production of goods in many industries. Many units, especially small-scale units, might have to shut down. Therefore, government has to bear part of the cost.
2. There are a large number of activities which are the primary responsibility of the government. The government must spend on these. Providing health and education facilities for all is one example. A healthy and educated workforce makes the nation stronger and is a necessity for the economic development of the nation.
3. Government provides a number of facilities that are for well being of people and contribute to economic development. For example : minimum support price to farmers, providing water and sanitation facilities, human development and housing facilities to poor. These steps are necessary for the upliftment of poor and to make them a part of the mainstream productive population.

The workers in the unorganised sector need protection on the following issues : wages, safety and health. Explain with examples.

Answer

Workers in the unorganized sector face several challenges related to wages, safety, and health.

1. Wages — Unorganized sector workers often receive meager wages. Their earnings are insufficient to meet basic needs. For example: many employers exploit them by paying less than fair wages and making them work longer hours without paying for the overtime.
2. Safety — Unorganized sector workers often lack safety measures. For instance, construction labourers may not have proper helmets or safety gear. Jobs like mining, construction, and waste disposal involve risks. However, safety protocols are often ignored.
3. Health — Some jobs (e.g., pesticide spraying, waste handling) pose health risks, but workers lack protective measures. Unlike formal jobs, unorganized sector workers don’t receive health insurance or medical benefits.

A study in Ahmedabad found that out of 15,00,000 workers in the city, 11,00,000 worked in the unorganised sector. The total income of the city in this year (1997-1998) was Rs 60,000 million. Out of this Rs 32,000 million was generated in the organised sector. Present this data as a table. What kind of ways should be thought of for generating more employment in the city?

Answer

A few ways of generating more employment in the city can be:

1. Skill Development Programs — Implement vocational training and skill development programs to enhance the employability of the workforce, especially in sectors with high demand.
2. Promotion of Small and Medium Enterprises (SMEs) — Provide incentives, subsidies, and easier access to credit for SMEs to encourage entrepreneurship and job creation.
3. Tourism and Culture — Develop the tourism and cultural sectors by improving infrastructure, marketing, and preserving heritage sites to attract tourists and create related employment.
4. Supporting Unorganised Sector — Formalise and support the unorganised sector by providing access to social security benefits, legal protections, and financial services.
5. Enhancing Education and Healthcare — Improve the quality of education and healthcare to build a healthier and more educated workforce, which can drive productivity and innovation.

The following table gives the GDP in Rupees (Crores) by the three sectors:

(i) Calculate the share of the three sectors in GDP for 2000 and 2013.

(ii) Show the data as a bar diagram similar to Graph 2 in the chapter.

(iii) What conclusions can we draw from the bar graph?

Answer

(i) In 2000, following were the share of:
Primary sector = 22.22 %
Secondary sector = 20.736 %
Tertiary sector = 57.051 %

In 2013, following were the share of:
Primary sector = 13.939 %
Secondary sector = 18.702 %
Tertiary sector = 67.357 %.

Solution:

In 2000, Total GDP = sum of all sectors
⇒ Total GDP = 52,000 + 48,500 + 1,33,500 = 2,34000 Crores

Share of Primary sector = (52,000/234000) x 100 = 22.22 %

Share of Secondary sector = (48,500/234000) x 100 = 20.736 %

Share of Tertiary sector = (1,33,500/234000) x 100 = 57.051 %

In 2013,
Total GDP = sum of all sectors
⇒ Total GDP = 8,00,500 + 10,74,000 + 38,68,000 = 57,42,500 Crores

Share of Primary sector = (8,00,500/57,42,500) x 100 = 13.939 %

Share of Secondary sector = (10,74,000/57,42,500) x 100 = 18.702 %

Share of Tertiary sector = (38,68,000/57,42,500) x 100 = 67.357 %

(ii) The bar diagram of the data is shown below:

(iii) We can draw the conclusion that the share of the tertiary sector in the GDP has increased by 10%, while that of the primary sector has decreased by approx 8 %. The secondary sector has decreased by about 2% in the last 13 years.