CHAPTER- SECTORS OF THE INDIAN ECONOMY

CLASS S2-A,B,C,D
SUBJECT- ECONOMICS
LEARNING OBJECTIVES-

a. To familiarise the learner with the sectors of the Indian economy and their contributions to the
GDP.
b. To understand the latest trends of employment in the three sectors
c. To identify the basis of classification of the economy into various sectors
d. To reason out the government investment in different sectors.

BROAD OVERVIEW-

a. Sectors of Economic activities

b. Comparison of the three sectors
c. Primary, Secondary and Tertiary sectors
d. Division of sectors as organised and Unorganised
e. Sectors in terms of ownership- Public and Private sectors.

METHODOLOGY-

a. Lecture Method using the Text Book as the base.

b. Flip Classroom
c. Class Discussion
 CLASSROOM PROCESS- (Three sectors of the Economy-a brief explanation, Interdependence of
the sectors, Calculation of GDP, Historical change in the sectors)
 The class will begin with the teacher introducing the chapter and asking students about their
understanding of the three sectors.
 After making sure that students are clear about the activities of the three sectors, a small exercise
will be conducted in class where the teacher will name some activities and the students would be
asked to identify the sector.
 The concept of Interdependence would be explained and again the students will be given some
examples in class and they would have to explain the idea of interdependence through the
examples.
 Finally the steps of calculating the GDP will be discussed one by one and then the students will be
asked to calculate the GDP on their own by giving them hypothetical figures.
 CLASSROOM PROCESS –(Rising Importance of the Tertiary sector, Disguised Unemployment and
it’s effects, How to create more employment in all the three sectors)
 Class will start with a discussion on the rising importance of the Tertiary sector and the reasons
behind it.
 By analysing various statistical data given in the text, students will be explained the reasons behind
Disguised Unemployment
 This will be followed by a class discussion on the effects of Unemployment on a country and the
ways employment can be generated to overcome the problem.

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CLASSROOM PROCESS-(MGNREGA –an analysis)

 Class will begin with students sharing the details of MNREGA which they were asked to research on
earlier.
 This will be followed by a detailed discussion on the same.

CLASSROOM PROCESS-( Organised and Unorganised sectors-a comparison; Private and public sectors –a
review)

 The class will begin by an explanation of the two criteria for classification. This will be followed by a
deeper understanding of the topic with the help of a Power-point presentation and examples
included in the Text book.
 Students will be asked to identify the sectors in the examples that will be given to them in class.
 Final summing up of the entire chapter.

RESOURCES-

a) Text Book
b) Power-Point Presentation
c) Notes

ASSESSMENT-

a) Worksheet
b) Participation in Class discussions.

Notes

Sectors of the Indian Economy

Primary Sector

 Those activities wherein goods are produced by exploiting natural resources. It provides the basic raw
materials for all goods subsequently produced.
 E.g. Agriculture, forestry, mining, fishing, animal husbandry etc.

Secondary Sector

 It refers to the industrial activity that involves the manufacturing process. Goods are produced in big
factories using natural or synthetic products as raw material.
 E.g. Textile production, construction, automobile, manufacturing etc.

Tertiary Sector

 This sector covers those activities that aid the primary and secondary sectors. It provides services rather
than goods and hence, it is also called the service sector.
 E.g. Transportation, education services, telephone, information technology, banking, health services etc.

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GDP/Gross Domestic Product

 It is the value of all final goods and services produced in a country during a year. It includes the total
production of all the three sectors of the economy.
 It is a measure of the size of a country’s economy.
 In India, primary sector was traditionally the biggest and most important sector.
 With the coming of industrialisation, secondary sector gained importance.
 Manufacturing became a major industry of the Indian economy.
 In the past few decades, tertiary sector has assumed much importance in terms of total production. Today,
tertiary sector is the largest producing sector in India and contributes the most to the country’s GDP.

Reasons for the Growing Importance of Tertiary Sector

 With the development of the nation, services such as banking, education, health, information technology,
municipal corporation, transport etc. are increasingly required.
 Development of agriculture and industry propelled the growth of service sector.
 Increase in the standard of living led to the introduction of new services such as eating outlets, shopping
arcades, professional training centres, tourism and hotels etc.
 Growth of information technology-based services.

Sectors in Terms of Employment & Share in GDP

 Sectors Employment /Share in GDP (%)

 Primary 63% /17%
 Secondary 14% /28%
 Tertiary 23%/ 55%
 Primary sector is the largest employer yet its contribution to the GDP is the least.

Underemployment

 A situation wherein a person is apparently employed in an activity though is not working to his/her full
potential. It is also called disguised unemployment as the person seems to be employed but in actuality,
he/she is not adding anything to production. It is most commonly observed in the Indian agricultural sector
where all members of a family work on a single field that produces the same output every year.

Solutions for Reducing Underemployment

 Provision of bank loans to farmers so that they can buy HYV seeds for increasing the yield.
 Irrigation facilities must be provided by constructing wells, canals and dams in order to increase production
and provide employment.
 Connecting villages to the nearby town through pukka roads so that farmers can sell their produce. Also, the
transportation of food crops to markets will generate employment opportunities for many.
 Promotion of local and small-scale industries in rural areas for channelizing the excessive work force of the
agricultural sector into the secondary sector. E.g. Flour mill, cold storage, etc.

MAHATMA GANDHI National Rural Employment Guarantee Act (MGNREGA)

 Passed by the Government of India in 2005.

 Initially implemented in 200 districts of India. Later extended to cover the entire nation.

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  Guaranteed 100 days of wage employment in a year is provided to each person able and willing to do
unskilled manual work.
 In case of failure to provide employment, the government shall give an unemployment allowance.

Organised Sector

 It refers to those work places where the terms of employment are fixed and the rules established by the
government are followed.

Features

 Registered by the government

 Follow labour laws such as the Factories Act, the Minimum Wages Act and the Payment of Gratuity Act etc.
 Job security
 Fixed working hours
 Fixed salary and leave policy
 Provision of provident fund and gratuity, medical benefits etc.

Unorganised Sector

 It is characterized by small and scattered work units that are largely outside the government’s control.

Features

 Laws laid down by the government are not followed

 No job security
 Low paid jobs
 No leave policy
 No fixed working hours

In rural areas, the workers are mostly landless farmers, sharecroppers and artisans.

In urban areas, it includes workers in small-scale industry, trade and transport, construction etc.

Public Sector

 It refers to the business enterprises owned by the government that provide services for the welfare of the
people. E.g. Railways, post offices, education etc.

Private Sector

 It refers to those enterprises that are owned by private individuals. The production is done with a motive of
earning profits. E.g. TISCO, Reliance etc.

Sectors of the Indian Economy

Basis of Classification

 Primary Secondary Tertiary: The nature of production process

 Organized Unorganized: The nature of employment
 Public Private: On the basis of ownership

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QUESTION AND ANSWERS:

1 What are final goods? Write two examples?

 Final goods are those goods which are used either for the final consumption or for capital formation. These
are not resold. In short, final goods have crossed the boundary line of production, and are ready for the use
by the final users. Cloth, air conditioners and refrigerators are examples of final goods.

2 What are basic services? How do they contribute for the growth of Tertiary sector?

 In any country, several services such as hospitals, educational institutions, post and telegraph services, police
stations, courts, village administrative offices, Municipal Corporation, defence, transport, banks, insurance
companies, etc. are required. These are considered as the basic services. Owing to growing income and
demand for such services tertiary sector becoming important.

3. Distinguish between the organized and the unorganized sector.

Organized Sector

i) The sector is registered by the government.

ii) The terms of employment are regular.
iv) The sector is governed by various laws such as the factories act, minimum wages act, etc.

Unorganized sector

i) The sector is not registered by the government.

ii) The terms of employment are not regular.
iii) The sector is not governed by any act.

4. What is meant by enterprise? Classify enterprises on the basis of ownership.

 When a person, a group of persons, is engaged in the production or distribution of goods or services which
are meant mainly for the purpose of sale, it is called an enterprise.
 Enterprises can be classified into Private and Public sector enterprise

5. State any three causes of unemployment?

i) Insufficient economic development: It is true that under the planned development millions of new jobs were
created but the number of job lookers was much more than those jobs.

ii) Defective system of education: In our educational system there is lack of training facilities, lack of vocational and
professional guidance.

iii) Slow growth of industrialization: Slow growth of industrialization in the country is yet another cause of
unemployment in the urban areas.

6. State any three need for protecting the Public sector?

1. To achieve social justice and equity

2. To provide basic services at an affordable price

3. Generating employment opportunities

7. Distinguish between unemployment and underemployment.

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  Unemployment is a situation where the able bodied persons willing to work but are not able to get a work.
 Underemployment is the situation of where people are apparently working but all of them are made to work
less than their potential. This kind of underemployment is hidden in contrast to someone who does not have
a job. Hence, it is also called disguised unemployment.

QUESTION AND ANSWERS:

1. Distinguish between Public sector and private sector

Public Sector

i) It is controlled and managed by the government.

ii) The main aim of the sector is public welfare.
iii) The sector provides basic facilities like education, health, food and security to the people.
iv) For ex, the Indian Railways, Post Office and the BSNL.

Private Sector

i) It is controlled and managed by an individual or a group

ii) The main aim of the sector is to earn maximum profits.
iii) The sector provides consumer goods to the people.
iv) For ex, Reliance, TISCO, etc

2 What are the objectives of MGNREGA 2005?

Or

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

i) NREGA, 2005 is a law which is implemented by government of Indian in 200 districts of India.

ii) It is referred to as ‘Right to Work’ because it guarantees 100days of employment in a year by the government to
all those who are able to work.

iii) Under this scheme, the gram panchayat after proper verification will register households, and issue job cards.

iv). And in case of failure unemployment allowance will be given to them.

3. What are the advantages of working in an organized sector?

i) Workers in the organized sector enjoy security of employment.

ii) They work only a fixed number of hours. If they work more, they have to be paid overtime by the employer.

iii) They also get several other benefits from the employers like paid leave, payment during holidays, provident fund,
gratuity, etc.

iv) They also get medical benefits and, under the laws, the factory manager has to ensure facilities like drinking
water and a safe working environment.

4. What are the disadvantages of working in an organized sector? Or

Why is it necessary to give protection and support to the unorganized sector workers? Explain.

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  The unorganized sector is characterized by small and scattered units which are largely outside the control of
the government. Workers working in an unorganized sector get fewer wages.
 There is no provision of overtime, paid leave, holidays, leave due to sickness, etc.
 Employment is subject to high degree of insecurity.

5. What are the measures to reduce unemployment?

i) Rural works programme: This program aims at construction of civil works of permanent nature in rural areas.

ii) Integrated Dry land agricultural development: Under this scheme, permanent works like soil conservation,
development of land water harvesting are undertaken.

iii) National Rural Employment Program: This program aims at creating community assets for strengthening rural
infrastructure – drinking water wells, community irrigation wells, village tanks, rural roads and schools.

iv) Rural Landless Employment Guarantee Program: It aims at generating gainful employment, creating

productive assets in rural areas and improving the overall quality of rural life.

ASSIGNMENT

I. Multiple Choice questions:

Select the correct answer and write in the Assignment sheet

Q1. GDP stands for Gross Domestic Product. What does it show?
(a) It shows the value of all final goods and services produced of a country in a given year in terms of its total output..
(b) It shows the number of people involved in production in a particular year.
(c) It shows the total value of trade trans-actions of a country in a particular year.

Q2. Which of the following examples does not fall under unorganized sector?
(a) A farmer irrigating his field.
(b) A daily wage labourer working for a contractor.
(c) A doctor in a hospital treating a patient.
(d) A handloom weaver working on a loom in her house.

Q3 NREGA (National Rural Employment Guarantee Act of 2005) has guaranteed ………. days of employment in a
year in many districts of India. What are the correct number of days?
(a) 200 days (b) 100 days
(c) 30 days (d) 60 days

Q4. Underemployment occurs —

(a) when people are not willing to work.
(b) when people are working slowly.
(c) when people are working less than what they are capable of doing.
(d) when people are not paid for their jobs.

Q5. Hidden employment is also called

a) Unorganised b) Seasonal c) Disguised d) Contractual

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Q6. In the question given below, there are two statements marked as Assertion (A) and Reason (R).Read the
statements and chose the correct option:

Assertion (A): In certain areas, government has to undertake heavy spending to ensure that facilities are available to
everyone in the society.

Reason (R): Some of the things needed by the society, require spending large sums of money, which is beyond the
capacity of the Private sector.

a) Both A and R are true and R is the correct explanation of A.

b) Both A and R are true and R is the not correct explanation of A.

c) A is correct but R is wrong.

d) A is wrong but R is correct

Q7. In the question given below, there are two statements marked as Assertion (A) and Reason (R).Read the
statements and chose the correct option:

Assertion (A): Not every good or service that is produced or sold needs to be counted to know the total production in
each sector.

Reason (R): The value of final goods already includes the value of all the intermediate goods.

a) Both A and R are true and R is the correct explanation of A.

b) Both A and R are true and R is the not correct explanation of A.

c) A is correct but R is wrong.

d) A is wrong but R is correct.

Q8. Identify the nature of employment- organized and unorganized

(a) In offices and factories registered with the government.
(b) Owns shops, office, clinics in marketplaces with formal license.
(c) People working on the street, construction workers, domestic workers.
(d) Working in small workshops usually not registered with the government

Q9. Read the text given below and answer the following questions.

Manufacturing industries not only help in modernising agriculture, which forms the backbone of our economy, they
also reduce the heavy dependence of people on agricultural income by providing them jobs in secondary and tertiary
sectors. Industrial development is a precondition for eradication of unemployment and poverty from our country.
This was the main philosophy behind public sector industries and joint sector ventures in India. It was also aimed at
bringing down regional disparities by establishing industries in tribal and backward areas. Export of manufactured
goods expands trade and commerce, and brings in much needed foreign exchange. Countries that transform their
raw materials into a wide variety of finished goods of higher value are prosperous. India’s prosperity lies in
increasing and diversifying its manufacturing industries as quickly as possible. Agriculture and industry are not
exclusive of each other. They move hand in hand. For instance, the agro-industries in India have given a major boost
to agriculture by raising its productivity.

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Answer the following MCQs by choosing the most appropriate option

9.1. Manufacturing industries fall in _________ and agriculture in ___________ .

A. Primary, Secondary Sector

B. Secondary, Tertiary Sector

C. Primary, Tertiary Sector

D. Secondary, Primary Sector

Q9.2 Which of the following options does not help in modernising agriculture?

A. Manufacturing farm equipment

B. Providing unskilled labour force

C. Supplying fertilizers and pesticides

D. Producing tube well pumps and sprinklers

Q9. 3. In order to attract foreign manufacturing firms, a country needs to develop –

A. Agrarian facilities

B. Cultivable lands

C. Media facilities

D. Infrastructure facilities

II. Answer the following questions:

Q1.Define: Primary, secondary and Tertiary sectors. Explain how they are interdependent.
Q2. Suggest some ways that jobs could be created in urban areas
Q3. Why is it necessary to provide protection to the unorganised sector workers?
Q4. Suggest some ways that jobs could be created in urban areas.

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