Sectors Of Economic Activities
Economic activities are those that are carried out with the intention of earning money. Most of these activities result in the production of goods, while others result in the provision of services.
Activities are categorised into several groupings based on their common characteristics, which are referred to as sectors.
Economic activity can be divided into three categories.
(i) There are three levels: primary, secondary, and tertiary.
(ii) There are two types of sectors: organised and unorganised.
(iii) Both the public and private sectors are involved.
Primary, Secondary And Tertiary Sector
In the primary sector of the economy, natural resources are turned into primary products. As a result, this industry is inextricably linked to the natural world.
Agriculture, mining, forestry, fishing and oil and gas extraction are all included.
It is also known as the agricultural and associated sector because agriculture, dairy, fishery, and forestry provide the majority of natural products.
The industrial sector, or the economy of the secondary sector, encompasses all economic operations that result in a finished, tangible product. Manufacturing and construction are included.
Natural products are transformed into new forms in this process, which might occur in a factory, a workshop, or at home. Cotton yarn and cloth weaving, sugar or gur made from sugarcane, and so on are examples. Because the secondary sector has become affiliated with various types of industries, it is often known as the industrial sector.
The Tertiary sector is made up of activities that help the Primary and Secondary sectors grow. These operations do not produce items, but they do provide services that help the manufacturing process run smoothly. Transportation, communication, banking, storage, and other services are examples of the service industry.
Doctors, attorneys, instructors, barbers, and information technology such as software, internet cafés, ATM booths, Business Process Outsourcing (BPO), Knowledge Process Outsourcing (KPO), and contact centres are all included.
Comparing The Three Sectors
Interdependence Of The Economy: All three sectors are related or interconnected in some way. Cotton from a cotton plant (Primary sector) is turned into textiles (Secondary sector), which are then sold (Tertiary sector).
End-Of-Sale Goods And Services: They are not designed for further manufacturing or processing, but rather for direct consumption by customers. When determining the value of a biscuit, for example, consider the value of the flour used to make the biscuit as well as the wheat used to make the flour.
As a result, biscuits are treated as finished goods, and their value will only be used to determine the quantity produced.Intermediate commodities (such as flour and wheat) are not valued.
Intermediate commodities (such as flour and wheat) are not valued.
The Gross Domestic Product (GDP) of a country is the total value of all finished products and services produced in all three sectors in a given year. It shows a country’s total output.
The Ministry of Statistics and Programme Implementation of the Government of India’s Central Statistical Office (CSO) is responsible for estimating India’s GDP.
Historical Change In Sectors
Economic activity steadily transitioned from primary to secondary to tertiary in industrialised countries, resulting in historic shifts in the economic sector. The service sector has now overtaken manufacturing as the most important industry. The transfer of economic activities does not mean that prior sectors are completely eliminated, but it does mean that the importance and domination of the next sector is increased.
In the 1950s and 1960s, agriculture and related industries formed the backbone of the Indian economy. Productivity increased dramatically in all three sectors between 1973 and 2003, with the Tertiary sector witnessing the most gain.
Primary, Secondary And Tertiary Sectors In India
In 1973-74, India’s total GDP was over ₹ 500,000 crore, with the primary sector dominating, but in 2013-14, the GDP was over ₹ 5,500,000 crore, with the service sector dominating.
It is attributable to an increase in tertiary activities such as banking, stock trading, and exports, among others. The primary sector grew as well.
Quantitatively, this demonstrates that it can maintain the population and has created a solid foundation for industrial development.
Rising Importance Of The Tertiary Sector
Quantitatively, this demonstrates that it can maintain the population and has created a solid foundation for industrial development.
The demand for basic services such as hospitals, academic facilities, post offices, police stations, banks, insurance firms, administrative offices, and defence has increased.
Greater expansion in the primary and secondary sectors has fueled demand for services such as transportation, trading, and storage.
With an increase in money, people have a better quality of life and a higher level of living in areas like tourism, shopping, private hospitals, and professional training, among other things, which has boosted the service sector.
Certain new services, such as information technology and communication technology, have entered the Indian market as a result of globalisation, and have become vital and crucial.
Many small service industries are struggling due to low productivity. As a result, only a small portion of the service sector employs highly educated and competent individuals.
Employment Of People In Different Sectors
The employment patterns are as follows:
Between 1972-73 and 2011-12, the primary sector accounted for 74% of the country’s GDP, down from 75% in 1972-73 to 49% in 2011-12.
There aren’t enough jobs in the secondary and tertiary industries to attract a big number of individuals away from agriculture.
Only three times as many people worked in the industrial sector. Only 5 times more people were employed in the service sector.
Many workers in the primary industry are underemployed or unemployed in disguise.
In urban places, disguised unemployment is also a problem.
Thousands of seasonal labourers, such as plumbers, painters, repair workers, odd job craftsmen, carpenters, and others, hunt for work in towns and cities on a daily basis.
Creating More Employment
The following are some methods for generating employment:
Technical And Institutional Measures
Irrigation, the availability of hybrid seeds, and awareness of contemporary agricultural practises all help to enhance the productivity of agricultural land and the demand for human labour in agriculture. Institutional assistance, such as a market, transportation, storage facility, and other processing units in the surrounding suburban region, would enhance farmer employment in other sectors.
Promotion Of Allied-Agriculture
Agriculture, which employs more than 60% of the population, requires diversification.
Farmers must be invited to participate in allied-agriculture activities such as pisciculture (fish farming), horticulture (growing fruits and vegetables), animal husbandry for milk and some other products, and beekeeping for honey, in addition to crop production.
Focus On Small Scale Industries And Bank Credit
Most farmers rely on informal lending sources such as relatives and friends, traders, moneylenders, and others who demand exorbitant interest rates. As a result, establishing commercial banks to provide farmers with lower-cost loans will benefit them. Through the development of cottage and small industries that can employ a large number of people in rural and semi-rural areas. For example, establishing rice and dal mills so that certain farmers can work in them. Cold storage and Food Processing Industries (FPI) can be built for agricultural goods such as potatoes, sweet potatoes, tomatoes, rice, wheat, and fruits.
Improvement In Rural Infrastructure
Roads, transportation, banks, warehouses, and markets are all lacking in rural locations. More money should be spent by the government to improve communication between villages and markets. Farmers, as well as others employed in services like transportation and trade, will be able to work more productively as a result of this.
Improvement In Education, Health And Tourism
Additional jobs will be generated to improve the health conditions in the villages. More schools must be built.
Many localities have been identified as having the potential to develop as tourism destinations, resulting in greater job opportunities for local residents.
Every year, tourism has the potential to produce 35 lakh employment.
Division Of Sectors As Organised And Unorganised
The industry refers to businesses or places of work where employees are employed on a regular basis and have a steady source of income. Because it follows some formal processes and procedures, it is referred to as organised. These businesses are regulated by the government and must adhere to various laws such as the Factories Act, the Minimum Wage Act, and the Payment of Gratuity Act, among others.
Workers in the organised sector, on the other hand, enjoy job security, work for a set amount of hours, and receive additional overtime pay if they are asked to work longer hours.
They are entitled to medical benefits, and management is responsible for providing amenities such as clean drinking water and a safe working environment.
Unorganized sector businesses, on the other hand, aren’t required to register with the government. Small and dispersed units dominate this sector, which are primarily outside of official authority and do not adhere to government norms and regulations. Workers are paid less, and there are no provisions for overtime pay, paid holidays, or paid sick leave, among other things.
In metropolitan regions, the unorganised sector employs a huge number of people who work as street hawkers, repairmen, domestic employees, and other such workers.
Landless agricultural labourers, small and marginal farmers, sharecroppers, and artisans (weavers, blacksmiths, carpenters, goldsmiths, and others) make up the unorganised sector in rural areas. Employees can be asked to leave their jobs at any time for no cause, making employment unstable. This category also includes casual workers and landless labourers in rural areas.
Protection Of Workers In Unorganised Sector
The following methods can be used to protect employees in the unorganised sector.
Alternatives to agriculture as a source of employment should be developed. For this to happen, other parts of the economy must be upgraded, such as power, finance, skill development, and other infrastructure.
Road and school construction, as well as irrigation canal digging and other comparable projects, should be done in rural regions to provide year-round employment for rural workers.
Because unorganised sector workers lack social security and job security, the administration must use them as mandated insurance, either marginal or nominal.
Sectors In Terms Of Ownership
Economic activities can also be classified based on ownership, which refers to who owns the assets and who is in charge of service delivery. The economy is divided into two sectors based on ownership: the public sector and the private sector.
Public And Private Sectors
The government sector is also known as the state sector or government sector since it controls most of the assets and provides all services in the public sector. Indian Railways, Bharat Heavy Electricals Limited, and others are examples. In the private sector, assets and services are held by individuals or private firms such as Hindustan Unilever and TISCO. The public sector is driven by a desire to help others, whereas the private sector is driven by a desire to make money.
In India, the public sector dominates mining, electricity production, healthcare, education, and other infrastructure development and core operations. Agriculture, trade, hotels, and commodities manufacturing are dominated by the private sector.
Role Of Public/Government Sector
- Infrastructure Development: This is accomplished through the development of transportation, energy, communication, heavy industries, and the construction of bridges, roads, and trains.
- Backwards Regions Development: Creating jobs in underdeveloped areas through establishing industries, building roads, and so on.
- Encourage the private sector to start small businesses and create jobs.
- Farmers are aided by the purchase of food grains, and impoverished people are aided by the provision of food grains at a reduced cost.
- It provides health treatment and education in underserved and rural communities.
- Dealing with starvation, a high infant mortality rate, contaminated drinking water, and a lack of shelter, among other issues.
NCERT Solved Question Answer – Economics Chapter 2 – Sectors Of The Indian Economy
Q1. 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)
Answer: (i) has not
(ii) Workers in the sector do not produce goods. (tertiary/ agricultural)
Answer: (ii) tertiary
(iii) Most of the workers in the sector enjoy job security. (organized/unorganized)
Answer: (iii) organized
(iv) A proportion of laborers in India are working in the unorganized sector. (large/ small)
Answer: (iv) large
(v) Cotton is a product and cloth is a product. (natural/manufactured)
Answer: (v) natural; manufactured
(vi) The activities in primary, secondary and tertiary sectors are (independent/ interdependent)
Answer: (vi) interdependent
Q2. Choose the most appropriate answer:
(a) The sectors are classified into public and private sectors 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.
Answer: (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.
Answer: (i) primary
(c) GDP is the total value 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.
Answer: (ii) all final goods and services
(d) In terms of GDP the share of the tertiary sector in 2003 is.
(i) Between 20 per cent to 30 per cent
(ii) Between 30 per cent to 40 per cent
(iii) Between 50 per cent to 60 per cent
(iv) 70 percent
Answer: (iii) between 50 per cent to 60 per cent.
Q3. Match the following
Answer: 1.-(d), 2.-(c), 3.-(e), 4.-(a), 5.-(b).
Q4. Find the odd one out and say why.
(i) Tourist guide, dhobi, tailor, potter
(ii) Teacher, doctor, vegetable vendor, lawyer
(iii) Postman, cobbler, soldier, police constable
(iv) MTNL, Indian Railways, Air India, SAHARA Airlines, All India Radio.
He is a tourist guide, and the government hires him. The dhobi (washerman), the tailor, and the potter all work in the private sector, but he is hired by the government.
He sells vegetables, but he doesn’t go to school.
Cobbler: Government workers aren’t like him. He works in the private sector for a company.
SAHARA Airlines: It is a private business, while the others are government projects.
Q5. 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 unorganized sector in this city?
The percentage of workers in the unorganized sector in this city is 70.
Q6. Do you think the classification of economic activities into primary, secondary and tertiary is useful? Explain how?
Answer: Yes, classifying economic activity as primary, secondary, or tertiary is very helpful because:
It tells us how and where a country’s citizens are employed.
It helps figure out which parts of an economy add the most or least to a country’s GDP and per capita income.
If the tertiary sector grows faster than the primary sector, this means that agriculture is shrinking, and the government needs to do something to stop this. If you don’t know what sector agriculture is in, you can’t know that it’s becoming less popular or falling behind.
So, putting economic activity into these three main sectors is important for growth and good management of the economy.
Q7. 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: Employment and GDP should be given the most attention because:
The size of a country’s economy depends on these factors.
It helps to figure out two very important numbers: per capita income and productivity.
For each of the three sectors, the employment rate and status, as well as the sector’s contribution to GDP, help us understand how that sector works and what needs to be done to boost growth.
Q8. 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: If we look around us, we’ll see people doing jobs like teacher, doctor, vegetable vendor, lawyer, postman, cobbler, soldier, police officer, tourist guide, dhobi, tailor, potter, etc., that are part of the economy.
Q9. How is the tertiary sector different from other sectors? illustrate with a few examples.
Answer: The tertiary sector is different from the other sectors because it does not make things, but instead helps or supports the process of making things. Since these activities lead to the creation of services instead of goods, the tertiary sector is often called the service sector. It helps both the primary and secondary industries grow.
Transportation: Goods made in the primary sector must be sent to wholesale and retail stores by trucks or trains.
Storage: Sometimes these things need to be kept in godowns, which is also a service.
Communication: Talk to other people on the phone or through the mail.
Banking: Borrow money from banks to help with business and production.
Q10. What do you understand about disguised unemployment? Explain with an example each from the urban and rural areas.
Answer: Disguised unemployment is when someone looks like they have a job but are forced to work less than they could or should. Even if a few employees quit, it won’t change how much work gets done. It is hidden, unlike open unemployment, where a person is out in the open about not having a job. In rural areas, this is clear in the farming community, where all members of a family may work on a farm even though they don’t need so many hands. They do this because they can’t find another job. In cities, disguised unemployment can be seen in the service sector, when painters, plumbers, and repair workers do odd jobs. Many of them have trouble finding jobs every day.
Q11.Distinguish between open unemployment and disguised unemployment.
Q12. “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: That’s not the case. In fact, the growth of India’s economy depends on the tertiary sector. The tertiary sector has been a big part of India’s economy, especially in the last twenty years. In the last 10 years, information and technology have grown, and as a result, the tertiary sector’s share of GDP has gone from about 40% in 1973 to more than 50% in 2003. It helps both the primary and secondary industries grow. Even though it doesn’t make things itself, it helps or supports the processes that do.
Q13. The service sector in India employs two different kinds of people. Who are these?
Answer: At one end of the spectrum, there are only a few services that hire highly educated and skilled people. On the other hand, there are a lot of people who work in service-related jobs, like small shop owners, mechanics, and people who work in transportation. These people can barely take care of themselves.
Q14. Workers are exploited in the unorganized sector. Do you agree with this view? Give reasons in support of your answer.
Answer: Yes, I agree that workers in the unorganised sector are taken advantage of.
The unorganised sector is made up of small, scattered groups that are mostly free from government control. Governments make rules and laws, but people don’t follow them. Jobs in this area are often low-paying and hard to find.
Q15. How are the activities in the economy classified on the basis of employment conditions?
Answer: Based on how the job is done, the following groups are made:
Organized sector: This is the sector where workers are guaranteed work and job conditions are known in advance. It is registered with the government and follows the rules and regulations set up by the government in a number of laws. People who work in the organised sector are sure of their jobs.
The unorganised sector is made up of small, scattered groups that are mostly free from government control. Even though the government makes rules and regulations, people don’t follow them. Jobs in this area are often low-paying and hard to find.
Q16. Compare the employment conditions prevailing in the organized and unorganized sectors.
Q17. Explain the objective of implementing the NREGA 2005.
Answer: All people who are capable and in need of work will be promised 100 days of labor, and if the government is unable to provide this, they will get unemployment benefits. Under this Act, effort that contributes to future increases in land output will be prioritized. It was implemented as the Right to Work in 330 districts across India.
Q18. Using examples from your area, compare and contrast the activities and functions of private and public sectors.
In the public sector, like with the Indian Railways, the government owns most of the assets and provides all of the services.
These industries care about social welfare and give their employees all the benefits to which they are entitled.
In the private sector, private people or businesses, like Tata Iron & Steel Company Limited, own assets and provide services.
These businesses mostly exist to make money.
Q19. Discuss and fill the following table giving one example each from your area.
Q20. Give a few examples of public sector activities and explain why the government has taken them up.
Answer: Water, power, and some types of transportation are just a few examples.
The government is helping them because people need water and electricity to live. If power and water delivery is given to private companies, those companies might take advantage of the situation and charge prices that the public can’t afford. So, to make sure everyone has access to basic needs like water and electricity, the government provides them at low prices and makes sure they are always available.
Q21. Explain how the public sector contributes to the economic development of a nation.
Answer: In the public sector, the government owns most of the assets and provides all the services. Public sector businesses try to help the community and give their workers all the benefits they deserve. Its health and education services have a big effect on the Human Development Index. The government’s job is to run good schools and make sure that everyone gets a good education, especially in the early grades. The government puts food and nutrition, access to clean water, and affordable housing for the poor at the top of its list of priorities when it comes to human development. The government also makes sure that people have a comfortable standard of living by buying food grains from farmers at a “fair price” and offering low-cost energy, water, and postal services.
Q22. The workers in the unorganized sector need protection on the following issues: wages, safety and health. Explain with examples.
Answer: Small, scattered groups that are mostly not controlled by the government make up the unorganised sector. There are no rules about overtime pay, paid time off, vacations, or sick days. In this area, it’s hard to find work.
Pay: People who work in the unorganised sector are often taken advantage of and don’t make enough to live on. Because they don’t make much money, they need to be protected. They need to be paid enough so they can take care of their families.
Safety: A lot of people make a living by working in mines or factories that make fireworks. So, people pose a serious threat that needs to be dealt with.
Health: Long hours and dirty workplaces are bad for the health of employees. A lot of people in this industry work on their own, doing things like selling on the street or fixing things.
Q23. A study in Ahmedabad found that out of 15,00,000 workers in the city, 11,00,000 worked in the unorganized sector. The total income of the city in this year (1997-1998) was ₹60,000 million. Out of this, ₹32,000 million was generated in the organized sector. Present this data as a table. What kind of ways should be thought of for generating more employment in the city?
To get more people working in the city, more businesses need to join the organised sector. This will give people from the unorganised sector the chance to get jobs with better and more stable pay. To do this, the government needs to give loans and help to businesses that are moving from unorganised to organised sectors.
Q24. The following table gives the GDP in Rupees (Crores) by the three sectors:
(i) Calculate the share of the three sectors in GDP for 1950 and 2011.
(ii) Show the data as a bar diagram similar to Graph 2 in the chapter.
(iii) What conclusion can we draw from the bar graph?
(i) In 1950
Share of sectors in GDP for the year 1950
Total GDP of three sectors (in 1950)
= 1,38,000 crores
Share of primary sector = 80,000÷1,38,000×100 = 57.97%
Share of secondary sector = 19,000÷1,38,000×100 = 13.76%
Share of tertiary sector = 39,000÷1,38,000×100 = 28.26%
Share of sectors in GDP for the year 2011
Total GDP of three sectors (In 2011) = 8,18,000+12,49,000+28,18,000 = 4,885,000 crores.
Share of primary sector = 8,18,000÷4,885,000×100 = 16.75%
Share of secondary sector = 12,49,000÷4,885,000×100 = 25.56%
Share of tertiary sector = 28,18,000÷4,885,000×100 = 57.68%
(iii) We could say that the tertiary sector’s contribution to GDP has almost doubled, while the contribution of the primary sector has almost gone down. The secondary sector has grown by about 10% over the past five years.