Sectors of the Indian Economy — Class 10 Social Science
Economics — Understanding Economic Development · Chapter 2
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Chapter summary
Key ideas & terms
- Primary sector
- Activities that produce goods by using natural resources, such as farming.
- Secondary sector
- Activities that turn raw materials into manufactured goods.
- Tertiary sector
- Activities that provide services, such as transport, banking and trade.
- Gross Domestic Product
- The value of all final goods and services produced in a year.
- Disguised unemployment
- A situation where more people work than are actually needed.
- Organised sector
- A sector with registered, regular jobs, fixed hours and security.
- Unorganised sector
- A sector with irregular, insecure jobs and no benefits.
- Underemployment
- Working less than one’s potential or below full capacity.
Extra questions & answers
How are the three sectors of the economy interdependent?
Each depends on the others — farms supply raw materials to industry, industry needs services, and services support both, so growth in one helps the rest.
What is disguised unemployment?
A situation, common in agriculture, where more people are engaged in work than is required, so that removing some would not reduce output.
How does MGNREGA help workers?
It guarantees 100 days of wage employment a year to rural households whose adult members volunteer to do unskilled manual work, providing income and reducing unemployment.
Distinguish between the organised and unorganised sectors.
The organised sector offers regular employment, fixed hours and benefits, while the unorganised sector has irregular, low-paid jobs without security or benefits.
Why is the tertiary sector becoming more important in India?
Because basic services and new services like IT and finance are in growing demand as incomes rise, and they now contribute the largest share of GDP.
How are the three sectors of the economy interdependent?
Each depends on the others — farms supply raw materials to industry, industry needs services, and services support both — so growth in one helps the rest.
What is disguised unemployment?
A situation, common in agriculture, where more people are engaged in work than is actually needed, so that removing some would not reduce output.
How does MGNREGA help rural workers?
It guarantees 100 days of wage employment a year to rural households whose adult members volunteer for unskilled manual work, providing income and reducing unemployment.
Distinguish between the organised and unorganised sectors.
The organised sector offers regular employment, fixed hours and benefits, while the unorganised sector has irregular, low-paid jobs without security or benefits.
Why has the tertiary sector become more important in India?
Because basic and new services like transport, banking, IT and finance are in growing demand as incomes rise, and they now contribute the largest share of GDP.
LET’S WORK THESE OUT
1. Complete the above table to show how sectors are dependent on each other.
If companies stop buying Indian cotton, cotton cultivation becomes less profitable, cotton prices fall and farmers may suffer losses. If the prices of fertilisers or pumpsets rise, farmers’ cultivation costs increase and their profits fall, showing that agriculture depends on industry. If transporters stop carrying vegetables and milk, urban consumers face shortages while farmers cannot sell their produce, showing that the primary, secondary and tertiary sectors depend on one another.
2. Explain the difference between primary, secondary and tertiary sectors using examples other than those mentioned in the text.
The primary sector obtains products directly from nature, such as tea cultivation, mining and fish farming. The secondary sector changes raw materials into manufactured goods, such as making furniture from timber or producing paper from wood pulp. The tertiary sector provides services that support production or meet people’s needs, such as banking, teaching, transport and medical care.
3. Classify the following list of occupations under primary, secondary and tertiary sectors:
• Tailor
• Basket weaver
• Flower cultivator
• Milk vendor
• Fishermen
• Priest
• Courier
• Workers in match factory
• Moneylender
• Gardener
• Potter
• Bee-keeper
• Astronaut
• Call centre employee
Primary sector: flower cultivator, fishermen, gardener and bee-keeper. Secondary sector: tailor, basket weaver, workers in a match factory and potter. Tertiary sector: milk vendor, priest, courier, moneylender, astronaut and call centre employee.
4. 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.
The criterion is the students’ class level, age and stage of learning. It is useful because children at different stages need different curricula, teaching methods and levels of difficulty. However, it should not be used to judge a student’s intelligence or worth.
LET’S WORK THESE OUT
1. What does the history of developed countries indicate about the shifts that have taken place between sectors?
In the early stages of development, the primary sector was dominant in production and employment. With industrialisation, the secondary sector became more important. Later, the tertiary sector became the largest sector as demand for services increased.
2. 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.
To calculate GDP, we add the monetary value of all final goods and services produced within a country during a particular year. Intermediate goods are not counted separately because their value is already included in the value of final goods.
3. 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.
At every stage, value added is found by subtracting the cost of intermediate inputs from the value of output. The total value of the final good equals the sum of value added at all stages. For example, if wheat worth
LET’S WORK THESE OUT
Answer the following questions by looking at the graph:
1. Which was the largest producing sector in 1977–78?
The primary sector was the largest producing sector in 1977–78.
2. Which is the largest producing sector in 2017–18?
The tertiary sector is the largest producing sector in 2017–18.
3. Can you say which sector has grown the most over forty years?
Yes. The tertiary sector grew the most over the forty-year period.
4. What was the GDP of India in 2017–18?
According to the graph, the combined GVA of the three sectors in 2017–18 was approximately
LET’S WORK THESE OUT
1. 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.
What are the changes that you observe in the primary sector over a span of forty years?
The primary sector’s share in GVA fell from about
2. Choose the correct answer:
Underemployment occurs when people
(i) do not want to work
(ii) are working in a lazy manner
(iii) are working less than what they are capable of doing
(iv) are not paid for their work
The correct answer is (iii) are working less than what they are capable of doing.
3. 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?
Developed countries experienced a clear movement of both production and workers from the primary sector to the secondary sector and later to the tertiary sector. In India, the tertiary sector became the largest contributor to production, but a large share of workers remained in agriculture. The desired movement of surplus agricultural workers into productive industrial and service-sector jobs did not occur sufficiently.
4. Why should we be worried about underemployment?
Underemployment wastes people’s productive capacity and keeps incomes low. More workers are engaged in a task than are actually needed, so removing some of them may not reduce output. Providing these workers with productive jobs elsewhere would raise individual, family and national income.
LET’S WORK THESE OUT
1. Why do you think MGNREGA 2005 or Viksit Bharat-G RAM G 2025 is referred to as ‘Right to work’ ?
It is called a ‘Right to work’ because the law makes the government responsible for providing a specified number of days of employment to rural people who are able and willing to work. If employment is not provided, eligible applicants are entitled to an unemployment allowance.
2. 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.
I would undertake the construction of irrigation canals, ponds, check dams, rainwater-harvesting structures, rural roads, storage facilities and soil-conservation works. These projects would provide immediate wages while improving farming, transport and market access, thereby increasing future income.
3. How would income and employment increase if farmers were provided with irrigation and marketing facilities?
Irrigation would allow farmers to grow more than one crop, use land more productively and employ additional workers. Better storage, transport and marketing would help them avoid distress sales and obtain fair prices. Increased production would also create jobs in processing, trade, transport and storage.
4. In what ways can employment be increased in urban areas?
Urban employment can be increased by promoting small and medium industries, construction, affordable housing, public transport, waste management, repair services, healthcare, education, tourism and information technology. Skill training, affordable credit and support for self-employment can also create jobs.
LET’S WORK THESE OUT
1. 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
The unorganised-sector activities are (ii) a headload worker carrying cement, (iii) a farmer irrigating her field, (v) a daily-wage labourer working under a contractor and (vii) a handloom weaver working in her house. A teacher or doctor may also be in the unorganised sector if employed by an unregistered establishment without regular conditions, but the examples normally imply formal institutions.
2. 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.
A regular organised-sector employee generally has fixed working hours, a written appointment, regular salary, paid leave, overtime payment, job security, provident fund, pension or gratuity, medical benefits and a safe workplace. An unorganised-sector worker often has irregular work, low or uncertain wages, long hours, no written contract, no paid leave or social-security benefits and may be dismissed without notice.
3. How would you distinguish between organised and unorganised sectors? Explain in your own words.
The organised sector consists of registered enterprises that follow government rules concerning wages, hours, safety and employment benefits. Jobs are generally regular and more secure. The unorganised sector consists mainly of small, scattered or unregistered units where rules are often not followed, jobs are insecure and workers usually receive few benefits.
4. The table below shows the estimated number of workers in India in the organised and unorganised sectors in the late 1990s. Read the table carefully. Fill in the missing data and answer the questions that follow.
The completed figures, in millions, are: Primary—organised
· What is the percentage of people in the unorganised sector in agriculture?
The percentage is
· Do you agree that agriculture is an unorganised sector activity? Why?
Yes, most agricultural work is unorganised because farms are generally small and scattered, employment is seasonal, workers often lack written contracts and regular wages, and benefits such as paid leave, pensions and job security are usually absent.
· 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.
About
LET’S RECALL
What was the most important conclusion that was derived from the classification exercises? What were the problems and solutions that were indicated? Can you summarise the information in the following table?
For the primary, secondary and tertiary sectors, the criterion is the nature of activity. The main conclusion is that the tertiary sector contributes the largest share of production, while the primary sector still employs a very large proportion of workers. The resulting problem is underemployment in agriculture; it can be tackled through irrigation, credit, storage, rural industries and more jobs in manufacturing and services. For the organised and unorganised sectors, the criterion is employment conditions and compliance with government rules. The main conclusion is that most workers are in the unorganised sector, where employment is insecure and poorly paid. The solution is enforcement of labour laws, fair wages, social security, safe working conditions and government support.
EXERCISES
1. 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)
has not
(ii) Workers in the _________ sector do not produce goods.
(tertiary / agricultural)
tertiary
(iii) Most of the workers in the _________ sector enjoy job security.
(organised / unorganised)
organised
(iv) A _________ proportion of labourers in India are working in the unorganised sector. (large / small)
large
(v) Cotton is a _________ product and cloth is a _________ product.
[natural /manufactured]
Cotton is a natural product and cloth is a manufactured product.
(vi) The activities in primary, secondary and tertiary sectors are_________
[independent / interdependent]
interdependent
2. Choose the most appropriate answer.
(a) The sectors are classified into public and private sector on the basis of:
(i) employment conditions
(ii) the nature of economic activity
(iii) ownership of enterprises
(iv) number of workers employed in the enterprise
(iii) ownership of enterprises
(b) Production of a commodity, mostly through the natural process, is an activity in _________ sector.
(i) primary
(ii) secondary
(iii) tertiary
(iv) information technology
(i) primary
(c) GDP is the total value of _________ produced during a particular year.
(i) all goods and services
(ii) all final goods and services
(iii) all intermediate goods and services
(iv) all intermediate and final goods and services
(ii) all final goods and services
(d) In terms of GVA the share of tertiary sector in 2017–18 is between _________ per cent.
(i) 20 to 30
(ii) 30 to 40
(iii) 50 to 60
(iv) 60 to 70
(iii) 50 to 60
1. Unirrigated land
(d) Construction of canals by the government
2. Low prices for crops
(c) Procurement of food grains by government
3. Debt burden
(e) Banks to provide credit with low interest
4. No job in the off season
(a) Setting up agro-based mills
5. Compelled to sell their grains to the local traders soon after harvest
(b) Cooperative marketing societies
4. Find the odd one out and say why.
(i) Tourist guide, dhobi, tailor, potter
The tourist guide is the odd one out because the guide provides a tertiary-sector service, whereas a dhobi, tailor and potter transform materials or produce goods and may be placed in the secondary sector.
(ii) Teacher, doctor, vegetable vendor, lawyer
The vegetable vendor is the odd one out because the others provide specialised professional services that normally require formal education and training.
(iii) Postman, cobbler, soldier, police constable
The cobbler is the odd one out because the postman, soldier and police constable generally work in the organised public sector, while a cobbler commonly works independently in the unorganised sector.
(iv) MTNL, Indian Railways, Air India, Jet Airways, All India Radio
Jet Airways is the odd one out because it is a private-sector enterprise, while the others are or were public-sector organisations in the context of the exercise.
5. 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?
Workers in registered offices and factories are organised and form
6. Do you think the classification of economic activities into primary, secondary and tertiary is useful? Explain how.
Yes. The classification shows the nature of different activities and the relationships among them. It helps compare each sector’s contribution to production and employment, study changes in the economy and identify problems such as excessive dependence on agriculture or inadequate industrial employment.
7. For each of the sectors that we came across in this chapter why should one focus on employment and GVA? Could there be other issues which should be examined? Discuss.
GVA shows how much value each sector adds to the economy, while employment shows how many people depend on that sector for work. Comparing them reveals productivity and underemployment. Other issues should also be examined, including wage levels, job security, working hours, safety, social security, environmental effects, equality, regional balance and the quality of goods and services.
8. 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.
Examples include farmers, dairy workers, fishers, miners, factory workers, carpenters, tailors, construction workers, shopkeepers, drivers, teachers, doctors, bank employees, domestic workers, street vendors and government officers. They can be classified by the nature of activity into primary, secondary and tertiary sectors; by employment conditions into organised and unorganised sectors; and by ownership into public and private sectors. These criteria show what work they do, how secure their employment is and who owns the enterprise.
9. How is the tertiary sector different from other sectors? Illustrate with a few examples.
The primary sector obtains natural products, while the secondary sector transforms raw materials into manufactured goods. The tertiary sector mainly provides services rather than goods. Transport, banking, communication, teaching, healthcare, trade and storage are examples. Many of these services support the production and distribution undertaken by the other two sectors.
10. What do you understand by disguised unemployment? Explain with an example each from the urban and rural areas.
Disguised unemployment exists when more people are engaged in an activity than are required, so some can leave without reducing output. In a rural example, five family members may cultivate a small farm even though three could produce the same crop. In an urban example, several members of a family may work in a tiny shop although the work can be managed by fewer people.
11. Distinguish between open unemployment and disguised unemployment.
Open unemployment occurs when a person who is willing and able to work has no job, so the unemployment is clearly visible. Disguised unemployment occurs when a person appears to be employed but adds little or nothing to output because more workers are engaged than necessary.
12. “Tertiary sector is not playing any significant role in the development of Indian economy.” Do you agree? Give reasons in support of your answer.
No. The tertiary sector has become the largest contributor to India’s production. It provides essential services such as education, healthcare, banking, transport, communication, administration and trade. It supports agriculture and industry, creates employment and has expanded through tourism, information technology and other modern services.
13. Service sector in India employs two different kinds of people. Who are these?
One group consists of highly skilled and educated workers employed in services such as information technology, banking, education and professional work. The other consists of a large number of workers such as small shopkeepers, repair workers, transport workers and street vendors who often earn little and work there because better opportunities are unavailable.
14. Workers are exploited in the unorganised sector. Do you agree with this view? Give reasons in support of your answer.
Yes. Workers in the unorganised sector often receive low and irregular wages, work long hours and lack overtime payment, paid leave, medical benefits, pensions and job security. Safety rules may not be followed, and workers can be dismissed without notice. Their weak bargaining position makes exploitation easier.
15. How are the activities in the economy classified on the basis of employment conditions?
On the basis of employment conditions, activities are classified into the organised and unorganised sectors. The organised sector includes registered enterprises that follow labour laws and provide regular employment conditions. The unorganised sector consists mainly of small or unregistered units where employment is irregular and legal protections are often not enforced.
16. Compare the employment conditions prevailing in the organised and unorganised sectors.
Organised-sector workers generally have regular jobs, fixed hours, written contracts, paid leave, overtime payment, job security, provident fund, gratuity, pensions, medical benefits and safer workplaces. Unorganised-sector workers usually face irregular and low-paid work, long hours, absence of written contracts, no paid leave or social security and a high risk of sudden dismissal.
17. Explain the objective of implementing the MGNREGA 2005 or
Viksit Bharat-G RAM G 2025.
The objective is to provide a legal employment guarantee to rural households needing work, reduce unemployment and underemployment, and strengthen livelihood security. The programme also gives preference to public works that create durable rural assets and improve future agricultural productivity.
18. Using examples from your area compare and contrast that activities and functions of private and public sectors.
A government school, public hospital, municipal water supply and state transport are public-sector activities. Their purpose is to provide essential and affordable services, including to people who may not be able to pay full cost. Private schools, clinics, shops and transport companies are owned by individuals or companies and generally operate to earn profit. Both sectors provide useful services, but their ownership, objectives, pricing and accountability differ.
19. Discuss and fill the following table giving one example each from your area.
Well managed organisation Badly managed organisation
Public sector
Private Sector
One possible response is: Public sector—well managed organisation: a government metro service; badly managed organisation: a poorly maintained municipal office. Private sector—well managed organisation: a reliable local bank; badly managed organisation: an unsafe, unregistered workshop. Answers may vary according to the area and should be supported with observations about service, maintenance, fairness and efficiency.
20. Give a few examples of public sector activities and explain why the government has taken them up.
Examples include railways, roads, bridges, electricity supply, irrigation projects, public hospitals, government schools, sanitation, defence and police services. The government undertakes them because they require heavy investment, benefit society as a whole, may not be profitable for private firms and must remain accessible and affordable to all sections of society.
21. Explain how public sector contributes to the economic development of a nation.
The public sector builds infrastructure, supplies basic services, supports agriculture and industry, creates employment and promotes education and healthcare. It can provide services in remote or poor regions, stabilise prices, protect vulnerable groups and invest in projects whose social benefits are greater than their immediate profits.
22. The workers in the unorganised sector need protection on the following issues : wages, safety and health. Explain with examples.
They need wage protection because employers may pay less than the legal minimum or delay payment. They need safety protection because construction workers, factory helpers and headload workers may work without helmets, guards or safe equipment. They need health protection because domestic workers, rag pickers and casual labourers often lack clean workplaces, medical insurance, paid sick leave and compensation for workplace injury.
23. 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?
The data can be presented as follows: organised sector—
24. The following table gives the GVA in Rupees (Crores) by the three sectors:
Year Primary Secondary Tertiary
2001-02 13,23,000 10,40,000 19,31,000
2021-22 24,79,400 40,73,000 73,25,000
(i) Calculate the share of the three sectors in GDP for 2000 and 2013.
The question mentions 2000 and 2013, but the printed table provides data for 2001–02 and 2021–22. Using the supplied data: for 2001–02, total GVA is
(ii) Show the data as a bar diagram similar to Graph 2 in the chapter.
Draw two equal-height stacked bars representing
(iii) What conclusions can we draw from the bar graph?
The primary sector’s share fell substantially, from about