Chapter 2 ( Sectors of the Indian Economy)
[Link] The Following Questions.
1. Fill in the blanks using the correct option given in the bracket :
(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.
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
Solution : (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
Solution : (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
Solution : (ii) all final goods and services
3. Match the following :
Problems faced by farming sector Some possible measures
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 (b) Cooperative marketing societies
local traders soon after harvest
Question 4. Find the odd one out and say why.
(a)Tourist guide, dhobi, tailor, potter
Ans- On the Basis of employment -
Tourist guide: Organised Sector while dhobi, tailor and potter belong to Unorganised
Sector.
On the Basis of Sectors -
Potter - Secondary Sector while dhobi, tailor and tourist guide belongs to tertiary Sector.
(b)Teacher, doctor, vegetable vendor, lawyer
Ans-Vegetable vendor: He is the only profession that does not require formal education. He
belongs to the private and unorganised sector while the rest are professionally qualified.
©Postman, cobbler, soldier, police constable
Ans-Cobbler: The rest are workers in the public sector, while his profession is part of the
private sector and does not require any qualification.
5. A research scholar looked at the working people in the city of Surat and found the
following:
Place of work Nature of employment Percentage of working
people
In offices and factories Organised 15
registered with the
government
Own shops, office, clinics 15
in marketplaces with a
formal license
People working on the 20
street, construction
workers, domestic workers
Working in small
workshops usually not
registered with the
government
Complete the table. What is the percentage of workers in the unorganised sector in
this city?
Ans :
Place of work Nature of employment Percentage of working
people
In offices and factories Organised 15
registered with the
government
Own shops, office, clinics Organised 15
in marketplaces with a
formal license
People working on the Unorganised 20
street, construction
workers, domestic workers
Working in small Unorganised 50
workshops usually not
registered with the
government
The percentage of workers in the unorganised sector in this city is 70%.
Q.6. Do you think the classification of economic activities into primary, secondary and
tertiary is useful? Explain how.
Ans. :
[Link] classification of economic activities into primary, tertiary and secondary is useful on
account of the information it provides on how and where the people of a country are
employed.
[Link], this helps in ascertaining as to which sector of economic activity contributes more or
less to the country’s GDP and per capita income.
3. It tells the economic planners as to which sector requires development and how much.
From the analysis,new ways of development could be devised. For example, if the tertiary
sector is developing much faster than the primary sector, then it implies that agriculture is
depleting, and the government must take measures to increase productivity in agriculture.
[Link] knowledge that the agricultural profession is becoming unpopular or regressive can
only come if we know which sector it belongs to.
[Link] it is necessary to classify economic activities into these three sectors for smooth
economic administration and development.
7. 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.
Solution :
1. For each of the sectors that we came across in this chapter, one should focus on
employment and GDP because these determine the size of a country’s economy and the
condition of the economy.
2.A focus on employment and GDP helps determine important things- per capita income
and productivity.
3. The number of people employed in each sector and the contribution of each sector to
GDP help us understand how the sector is functioning and what steps are needed for its
further growth.
[Link], the other issues which should be examined are –
• Balanced regional development.
•Equality in income and wealth among the people of the country.
• How to eradicate poverty?
• Modernization of technology.
• Self-reliance of the country.
• How to achieve surplus food production in the country?
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.
Ans : Some Samples of Work People Do and Their Classification
S. No. Nature of work Nature of Activity Sector
1 Bank Clerk Tertiary Organized
2 Freelance Tertiary Unorganized
Cartoonist
3 Construction Secondary Unorganized
Worker
4 Doctor in AIIMS Tertiary Organized
5 DTC Bus Driver Tertiary Organized
6 Farmer Primary Unorganized
7 Guest House Tertiary Unorganized
Receptionist
8 Mine Worker Primary Unorganized
9 Own Tailoring Tertiary Unorganized
Shop
10 Public Sector Secondary Organized
Factory Supervisor
We classify them according to the nature of activity and whether they are working in an
organised or unorganised sector. It provides information on how and where the people are
employed.
9. How is the tertiary sector different from other sectors? Illustrate with a few
examples.
Ans:
1. The tertiary sector is different from the other two sectors. This is because the other
two sectors produce goods but this sector produces services rather than goods.
2. 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.
3. 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.
4. Similarly, doctors, teachers, lawyers, tailors, etc., come under the tertiary sector as
they provide services rather than material goods.
5. In recent times, certain new services based on information technology such as
internet cafes, ATM booths, call centers, software companies etc have become
important.
Q10. What do you understand about disguised unemployment? Explain with an
example each from the urban and rural areas.
Ans :
Disguised Unemployment is a kind of unemployment in which there are people who are
visibly employed but are actually unemployed. In other words it occurs when more people
are employed for the same work than actually required. This situation is also known as
Hidden Unemployment. In such a situation more people are engaged in work than required.
For example :
*In rural areas, this type of unemployment is generally found in agricultural sector like - in a
family of 9 people all are engaged in the same agricultural plot. But if 4 people are with
drawn from it there will be no reduction in output. So, these 4 people are actually disguisedly
employed.
*In urban areas, this type of unemployment can be seen mostly in service sectors such as in
a family where all members are engaged in one petty shop or a small business which can be
managed by fewer people.
11. Distinguish between open unemployment and disguised unemployment.
Solution :
Open Unemployment Disguised unemployment
It is an unemployment situation where one This is a kind of unemployment in which
does not have a job and is clearly visible there are people who are visibly employed
as unemployed. but actually they don’t have full
employment. In such a situation more
people are engaged in work than required.
For example an engineer not able to find For example, a family working on a small
a job agricultural field
This type of unemployment is generally This type of unemployment is generally
found in the industrial sector of our found in the unorganized sector where
country. This is also found among the either work is not constantly available or
landless agricultural labourers in rural too many people are employed for the
areas. same work that does not require so many
hands.
This kind of unemployment exists due to The absence of alternative employment
lack of resources. opportunities leads to this situation.
Q 12. “The tertiary sector is not playing any significant role in the development of the
Indian economy.” Do you agree? Give reasons in support of your answer.
Answer:
No, I do not agree with the statement that the tertiary sector is not playing any significant role
in the development of the Indian economy.
The tertiary sector plays a very important role in India’s development because:
[Link] contributor to GDP: The tertiary sector contributes the highest share to India’s
Gross Domestic Product (GDP).
[Link] employment: It generates employment opportunities in areas such as
education, healthcare, banking, transport, communication, tourism, and information
technology.
[Link] other sectors: Agriculture and industry depend on services like transportation,
storage, banking, and communication for their growth.
[Link] economic growth: Rapid growth of services such as IT, e-commerce, and
tourism has increased income and improved living standards.
[Link] trade and commerce: Banking, insurance, and communication services help
in the smooth functioning of business activities.
Therefore, the tertiary sector plays a significant and indispensable role in the development of
the Indian economy.
Q 13. The service sector in India employs two different kinds of people. Who are
these?
Answer:
The service (tertiary) sector in India employs two different kinds of people:
[Link] skilled and educated workers – such as doctors, teachers, engineers, bankers,
software professionals, and lawyers.
[Link]-skilled or unskilled workers – such as shopkeepers, street vendors, drivers,
domestic workers, cleaners, and security guards.
Thus, the service sector provides employment opportunities to both skilled and unskilled
workers.
14. Workers are exploited in the unorganised sector. Do you agree with this view?
Give reasons in support of your answer.
Solution : Yes, workers are exploited in the unorganized sector. This would be clear from
the following points:
• No rules and regulation followed.
• There is no fixed number of working hours. The workers normally work 10 – 12 hours
without paid overtime.
• They do not get other allowances apart from the daily wages.
• Government rules and regulations to protect the labourers are not followed there.
• There is no job [Link] can be asked to leave the job at any time.
• Jobs are low paid and the workers in this sector are generally illiterate, ignorant and
unskilled. So they are not in a position to bargain or secure good wages.
• Being very poor they are always heavily in debt. So, they can be easily made to accept
lower wages.
• Social discrimination.
15. How are the activities in the economy classified on the basis of employment
conditions?
Solution : On the basis of employment conditions, the activities in the economy are
classified into organized and unorganized sectors:
Organized Sector- This sector covers those enterprises which are registered by the
government and have to follow its rules and regulations which are given in the various laws
such as the Factory Act, Minimum Wages Act, Payment of Gratuity Act, Shops and
Establishment Act etc. Workers in the organised sector enjoy the security of employment.
They are expected to work only a fixed number of hours. If they work more, they have to be
paid overtime by the employer. They get paid leave, payment during holidays, provident
fund, gratuity etc. For example, Reliance Industries Ltd., GAIL etc.
Unorganized Sector- It includes those small and scattered units which are not registered
and are largely outside the control of the government. Though there are rules and
regulations, these are never followed here. For example, casual workers in construction,
shops etc. Jobs here are low paid and often not regular. There is no provision for overtime,
paid leave, holidays, leave due to sickness etc. In this sector there is no job security and the
conditions of employment are also very tough. People can be asked to leave without prior
information or reason.
16. Compare the employment conditions prevailing in the organised and unorganized
sectors.
Ans-
Basis Organised Sector Unorganised
Sector
Job Security In organised sector workers have job In the unorganised sector
security workers do not have any job
security. Their jobs can be
terminated any time.
Rules and The organised sector, follow all the The Unorganised sector, do not
Regulations rules and regulations, and the are follow any rules and regulations
registered as they are not registered
Wages Workers in organised sector are paid Workers in Unorganised sector
regularly are not paid regularly
Other Organised sector pays, other benefits Unorganised sector fo not pay
Benefits like medical leaves, provident funds, anything other than salary
paid leaves apart from wages
Number of There are fixed number of hours in In unorganised sector the
hours organised sector number of hours increases or
decreases as per the work
17. Explain the objective of implementing the NREGA 2005./ MGNREGA 2009.
Answer: The objective of implementing the this act was -
*To increase the income and employment of the rural people.
*NREGA/ MGNREGA -Under this act, all those who are able to and are in need of work in
rural areas are guaranteed hundred days of employment in a year by the government.
* If the government fails to provide employment, it will give unemployment allowances to the
[Link] type of work that would help to increase the production from land will be given
preference under the Act. (Students to Note -MGNREGA has been officially repealed and
replaced by the Viksit Bharat – Guarantee for Rozgar and Ajeevika Mission (Gramin),
known by the acronym VB–G RAM G.)
18. Using examples from your area compare and contrast the activities and functions
of private and public sectors.
Ans :
Difference between Private Sector Public Sector are -
Basis of Difference Private Sector Public Sector
Meaning /Ownership, Owned, managed and Owned, managed and
Management and Control controlled by private controlled by the
individuals or companies. government.
Aim The Main aim is to earn The Main aim is public
profit. welfare and providing
essential services.
Examples Examples: private schools, Examples: government
private hospitals, shopping schools, government
malls, mobile companies. hospitals, post offices,
railways.
Area of Investment Prefered Usually invests in areas Provides services even in
where profits are higher. less profitable areas for
public benefit.
Example from our area:
Government schools and government hospitals are part of the public sector as they provide
affordable services to [Link] the other hand, private schools, private clinics, and private
shops are part of the private sector because they are owned by individuals and operate
mainly to earn profit.
Thus, both sectors play important roles in the development of the economy, but their
objectives and functions are different.
19. Discuss and fill the following table giving one example each from your area.
Well-managed organisation Badly-managed organisation
Public sector
Private sector
Ans :
Well-managed Badly-managed
organisation organisation
Public sector Railways Life Insurance Sugar mills are are poorly
Corporation of India( LIC) managed in some states
are well managed and are suffering losses
Private sector Tata Iron and Steel Kingfisher Airlines, Jet
Company( TISCO) and Airways were badly
Reliance Industries( RIL), managed. Now in these
Infosys days Vodafone Idea, Spice
jet are suffering losses.
20. Give a few examples of public sector activities and explain why the government
has taken them up.
Ans. Some examples of public sector activities are:
(i) Railways
The government has taken up railways because:
* It requires huge investment which private companies may not be willing to make.
* It provides affordable transportation facilities to people across the country.
* It serves the public interest rather than focusing only on profit.
(ii) Electric Power Generation by NTPC
The government has taken this up:
* To ensure a regular supply of electricity.
* To provide electricity at reasonable rates to consumers.
* To support industrial and economic development.
(iii) AIIMS (All India Institute of Medical Sciences)
All India Institute of Medical Sciences was established:
* To provide quality healthcare services at affordable rates.
* To impart medical education and training.
* To promote medical research.
(iv) Construction of Dams and Irrigation Projects
The government undertakes these projects:
* To provide water for irrigation and agriculture.
* To generate hydroelectric power.
* To control floods and ensure water supply for households and industries.
The government undertakes these activities because they require huge investments, are
essential for public welfare, and may not yield immediate profits. Private companies may not
be interested in providing these services on a large scale, especially in remote and less
profitable areas.
21. Explain how the public sector contributes to the economic development of a
nation.
Ans. The public sector contributes to the economic development of a nation in the following
ways:
1. Provides basic infrastructure such as roads, railways, electricity, dams, and
communication facilities, which support economic activities.
2. Generates employment by providing jobs in government departments and public sector
enterprises.
3. Promotes social welfare by offering education, healthcare, drinking water, and other
essential services at affordable rates.
4. Ensures balanced regional development by setting up industries and services in
backward and remote areas.
5. Produces essential goods and services that are necessary for the public but may not be
profitable for private companies.
6. Mobilises resources for development through taxes and investments in public projects.
7. Supports economic growth by investing in sectors that require large capital and have
long gestation periods.
Thus, the public sector plays an important role in promoting economic growth, social
welfare, and overall development of the country.
22. The workers in the unorganised sector need protection on the following issues:
wages, safety and health. Explain with examples.
[Link] workers in the unorganised sector need protection on the following issues:
1. Wages: -Workers in the unorganised sector are often paid very low and irregular wages.
They usually do not get overtime payment, paid leave, or other benefits. Their jobs are not
secure and they can be removed from work without notice. Therefore, minimum wage laws
should be strictly implemented to protect them.
2. Safety:-Many workers have to work in unsafe and hazardous conditions, such as in
mines, construction sites, and chemical industries. They are often not provided with proper
safety equipment or basic facilities like clean drinking water and sanitation. Hence, safe
working conditions must be ensured.
3. Health:-Workers generally do not receive medical benefits, health insurance, or paid sick
leave. For example, construction workers often continue working even when ill because they
lose wages if they take leave. Therefore, health insurance, medical facilities, and reasonable
working hours should be provided.
Conclusion:
The government should enforce labour laws strictly to ensure fair wages, safe working
conditions, and health benefits for workers in the unorganised sector.
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?
Solution :
Organised Sector Unorganised Total
Sector
No. of workers 4,00,000 11,00,000 15,00,000
Income (Rs) 32,000 million 28,000 million 60,000 million
Ways to Generate More Employment in the City
1. Promote small-scale and cottage industries by providing loans and subsidies.
2. Encourage labour-intensive industries that can employ more workers.
3. Improve infrastructure such as roads, transport, electricity, and communication.
4. Provide skill development and vocational training to workers.
5. Support self-employment through easy credit and entrepreneurship programmes.
6. Increase public investment in construction, education, healthcare, and other public
services
[Link] government should encourage the entrepreneurs in the unorganized sector to change
them into the organized sector.
[Link], the government should introduce some incentives so that more industries could
be opened up in the organized sector.
24. 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?
Year 2000
Total GDP = 52,000 + 48,500 + 1,33,500 = 2,34,000 crores
Sector GDP (₹ Crores) Share in GDP (%)
Primary 52,000 (52,000/2,34,000) × 100 =
22.22%
Secondary 48,500 (48,500/2,34,000) × 100 =
20.73%
Tertiary 1,33,500 (1,33,500/2,34,000) × 100 =
57.05%
Total 2,34,000 100%
Year 2013
Total GDP = 8,00,500 + 10,74,000 + 38,68,000 = 57,42,500 crores
Sector GDP (₹ Crores) Share in GDP (%)
Primary 8,00,500 (8,00,500/57,42,500) ×
100 = 13.94%
Secondary 10,74,000 (10,74,000/57,42,500) ×
100 = 18.70%
Tertiary 38,68,000 (38,68,000/57,42,500) ×
100 = 67.36%
Total 57,42,500 100%
iii) Conclusions from the Bar Graph
1. The tertiary sector contributed the largest share to GDP in both years.
2. The share of the tertiary sector increased from about 57% in 2000 to 67% in 2013.
3. The share of the primary sector decreased from about 22% to 14%.
4. The share of the secondary sector decreased slightly from about 21% to 19%.
5. This shows that the service sector has become the most important sector of the
Indian economy and has grown much faster than the other two sectors.