ECONOMICS

CH: 2 SECTORS of INDIAN ECONOMY

GLOSSARY:
1. Primary sector:
When we produce goods by exploiting natural resources, it is an activity of the primary sector.

2. Secondary sector:
Covers activities in which natural products are changed into other forms through ways of
manufacturing, it is also called as industrial sector.

3. Tertiary sector:
These are the activities that help in the development of the primary & secondary sector. These
activities by themselves do not produce goods but they are an aid and support to the production
process. Example: Transportation-Goods that are produced in the primary sector need to be
transported by trucks or trains and then sold in the wholesale and retail shops; Storage—at
times it is necessary to store these products in godowns, which is also a service made available.
Communication -talking to others on telephone); Banking-borrowing money from the banks.
Since these activities are generate services rather than goods it is also called Service sector.

4. Gross Domestic Product (GDP):

The value of final goods and services produced in each sector during a particular year provides
the total production of the sector for that year. And sum of production in three sectors give
Gross Domestic Product—GDP of the country. It is the value of all final goods and services
produced within the country during a particular year.

5. Underemployment:
This 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.

6. Disguised Unemployment:
More people engaged in agriculture than are necessary. This kind of underemployment is
hidden in contrast to someone who does not have a job and is clearly visible as unemployed.
This situation is called disguised unemployment.

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7. Mahatma Gandhi National Rural Employment Guarantee Act 2005, (MNREGA 2005):
Under NREGA 2005, all those who are able to, and are in need of, work have been guaranteed
100 days of employment in a year by the government. If the government fails in its duty to
provide employment, it will give unemployment allowances to the people.

8. Organised sector:
It covers those enterprises or places of work where the terms of employment are regular and
therefore, people have assured work.

9. Unorganized sector:
It is characterized by small and scattered units which are largely outside the control of the
government. There are rules and regulations but these are not followed.

10. Public sector:

In this sector government owns most of the assets and provides all the services.

POINTS TO PONDER:

Growing importance of Tertiary sector:

a. In any country several services such as hospitals, educational institutions, post and telegraph
services, police stations, courts, village administrative offices, municipal corporations, defence,
transport, banks, insurance companies etc. are required.
b. The development of the agriculture and industrial leads to the development of services such as
transport, trade, storage and the like. Greater the development of primary and secondary sectors
more will be demand of such services.
c. As the income level rise, certain sections of people start demanding many more services like
eating out, tourism, shopping , private hospitals, professional training etc. This is found
especially in the big cities.
d. Over the past decade or so certain new services such as those based on the information and
communication technology have become important & essential.

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Where are Most People Employed?

Primary Sector Secondary Sector Tertiary Sector

More than half of the workers in India are These sectors employ less than half the people
working in the primary sector, mainly in as compared to the primary sector.
agriculture.
It contributes to only a quarter of the GDP. These sectors produce four-fifths of the
product.

How to Create More Employment:

a. Employment can be given to people by identifying, promoting and locating industries and
services in semi-rural areas.
b. Every state or region has the potential for increasing the income and employment for people in
that area. It can be done by tourism, or regional craft industry, or new services like IT.
c. A study conducted by the Planning Commission (known as NITI Aayog) estimates that nearly
20 lakh jobs can be created in the education sector alone.
d. The central government in India made a law implementing the Right to Work in about 625
districts of India, which is called Mahatma Gandhi National Rural Employment Guarantee Act
(MGNREGA) 2005.
e. Under MGNREGA 2005, 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.
f. If the government fails in its duty to provide employment, it will give unemployment
allowances to the people.

Division of Sectors as Organised and Unorganised:

Organised Sector Unorganised Sector

It is a sector where the employment terms are The unorganised sector is characterised by small
fixed and regular, and the employees get and scattered units, which are largely outside the
assured work. control of the government.
They are registered by the government and have
to follow its rules and regulations, which are There are rules and regulations but these are not
given in various laws such as the Factories Act, followed since they are not registered with the
Minimum Wages Act, Payment of Gratuity Act, government.
Shops and Establishments Act, etc.
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 The job is regular and has fixed working hours.
If people work more, they get paid for the Jobs are low-paid and often not regular.
overtime by the employer.
Employment is not secure. People can be asked
Workers enjoy the security of employment.
to leave without any reason.
People working in the organised sector get
several other benefits from the employers such There is no provision for overtime, paid leave,
as paid leave, payment during holidays, holidays, leave due to sickness, etc.
provident fund, gratuity, etc.
People get medical benefits. The factory
manager has to ensure facilities like drinking There are no such facilities in the unorganised
water and a safe working environment. When sector.
they retire, these workers get pensions as well.
Examples of the organised sectors are
Examples of the unorganised sectors are
Government employees, registered industrial
Shopkeeping, Farming, Domestic works,
workers, Anganwadi workers, village health
Labouring, Rickshaw pulling, etc.
workers, etc.

How to Protect Workers in Unorganised Sector?

a. There is a need for protection and support of the workers in the unorganised sector. Here are a
few points which will help in doing so.
b. The government can fix the minimum wages rate and working hours.
c. The government can provide cheap loans to self-employed people.
d. Government can provide cheap and affordable basic services like education, health, food to
these workers.
e. The government can frame new laws which can provide provision for overtime, paid leave,
leave due to sickness, etc.

Sectors in Term of Ownership: Public and Private Sectors:

Public Sector Private Sector

In the private sector, ownership of assets and
In the public sector, the government owns most
delivery of services is in the hands of private
of the assets and provides all the services.
individuals or companies.

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 Companies like Tata Iron and Steel Company
Railways or post office is an example of the
Limited (TISCO) or Reliance Industries
public sector.
Limited (RIL) are privately owned companies.

The purpose of the public sector is not just to Activities in the private sector are guided by the
earn profits. Its main aim is public welfare. motive to earn profits.

Responsibilities of Government:
There are a large number of activities which are the primary responsibility of the government. Here,
we have listed a few of them:

a. Government raises money through taxes and other ways to meet expenses on the services
rendered by it.
b. Governments have to undertake heavy spending such as the construction of roads, bridges,
railways, harbours, generating electricity, providing irrigation through dams, etc. Also, it has
to ensure that these facilities are available for everyone.
c. There are some activities, which the government has to support to encourage the private sector
to continue their production or business.
d. The government in India buys wheat and rice from farmers at a ‘fair price’ and sells at a lower
price to consumers through ration shops. In this way, it supports both farmers and consumers.
e. Running proper schools and providing quality education, health and education facilities for all
are some of the duties of the government.
f. Government also needs to pay attention to aspects of human development such as availability
of safe drinking water, housing facilities for the poor and food and nutrition, taking care of the
poorest and most ignored regions of the country.

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