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Main Sectors of Indian Economy : Services - Questions & Answers

MULTIPLE CHOICE QUESTIONS

  1. The service sector has become very important in India because
    (a) it is the largest contributor to India's GDP
    (b) it has attracted significant foreign investment
    (c) Both (a) and (b)
    (d) None of these

    Answer: (c) Both (a) and (b)

  2. The service sector in India presently employs 33% of the working population.
    (a) 33%
    (b) 10%
    (c) 53%
    (d) 20%

  3. Which sector has emerged as the largest producing sector in India?
    (a) Primary Sector
    (b) Tertiary Sector
    (c) Secondary Sector
    (d) None of these

    Answer: (b) Tertiary Sector

  4. Which of the following sector does not come under the service sector in India?
    (a) Real Estate
    (b) Transport
    (c) Restaurants and Hotels
    (d) Mobile production

    Answer: (d) Mobile production

  5. Service sector includes
    (a) banking
    (b) communication
    (c) trade
    (d) All of these

    Answer: (d) All of these

  6. Which of the following statements are correct?
    I. Service sector (through transport System) helps to carry raw materials and finished goods from one place to another.
    II. The percentage share of the Service Sector in India's GDP is decreasing
    Alternatives:
    (a) Only I
    (b) Only II
    (c) Both I and II
    (d) None of these

    Answer: (a) Only I

  7. Which of the following statement is/are correct?
    I. The service sector is the largest employer in India
    II. The service sector is the largest contributor to India's GDP
    Alternatives:
    (a) Only I
    (b) Only II
    (c) Both I and II
    (d) None of these

    Answer: (b) Only II

ASSERTION - REASONING & MATCHING BASED QUESTIONS

  1. Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
    Assertion (A): Service sector has emerged as the largest producing sector in India.
    Reason (R): Service sector provides services only to the primary sector.
    Alternatives:
    (a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
    (b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
    (c) Assertion (A) is true but Reason (R) is false.
    (d) Assertion (A) is false but Reason (R) is true.

    Answer: (c) Assertion (A) is true but Reason (R) is false.

  2. Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
    Assertion (A): Health services are an example of consumer service.
    Reason (R): Banking services are an example of productive services.
    Alternatives:
    (a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
    (b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
    (c) Assertion (A) is true but Reason (R) is false.
    (d) Assertion (A) is false but Reason (R) is true.

    Answer: (b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).

  3. From the set of statements given in column I and column II choose the correct pair of statements.
    Column I
    (A) Service sector
    (B) Economic Services
    (C) Social Services
    Column II
    (i) Largest employer in India
    (ii) Necessary for human development
    (iii) Health and Education
    Choose the correct alternative:
    (a) A-(i)
    (b) B-(ii)
    (c) C-(iii)

    Answer: (c) C-(iii)

SHORT ANSWER TYPE QUESTIONS

  1. What is meant by service sector?

    Answer: Service sector produces services instead of goods. It covers a wide range of services such as trading, storage, insurance, transportation, communication, financial, real estate and various types of professional services.

  2. Give two advantages of service sector.

    Answer:
    (i) It provides transportation services to the primary and secondary sectors of the economy.
    (ii) It improves the efficiency of workforce.

  3. Give any two reasons for the increasing importance of the service sector in India.

    Answer:
    (i) Service sector holds the highest share in the country's GDP and is a key factor for employment generation.
    (ii) It is the largest recipient of Foreign Direct Investment in India, fueled by liberalisation and economic reforms.

  4. Explain any two types of interdependence between agricultural and service sectors.

    Answer:
    (i) Agriculture provides various food items to the urban population working in the various service sector activities.
    (ii) Service sector provides various services like trading, banking and other financial services to the agricultural sector.

  5. State any two types of interdependence between industry and service sectors.

    Answer:
    (i) The industrial sector depends on the service sector for transport, banking and financial services, as well as education and health services.
    (ii) The service sector depends on the industrial sector for the different types of manufactured products like computers, printers, paper, furniture, airconditions, electricity etc.

  6. What are economic services?

    Answer: Economic services refer to all those services that directly support the system of production and distribution.

LONG ANSWER TYPE QUESTIONS

  1. Discuss role of service sector in the development of an economy.

    Answer: The service sector forms the backbone in the socio-economic development of a region or nation. It accelerates economic growth and promotes public welfare in the following ways:
    (a) It is the largest contributor to the national income in India.
    (b) It directly supports the primary and secondary sectors by providing essential infrastructural services like transport and banking.
    (c) A well-developed social infrastructure (health, education) symbolises a good quality of life and improves the efficiency of the workforce.
    (d) It plays an important role in reducing regional disparities by expanding communication, transport, and banking facilities in backward areas.
    (e) It generates substantial employment opportunities.

  2. Distinguish between economic and social services.

    Answer:
    Economic Services Social Services
    1. Economic services are those services which directly contribute to the production and distribution of goods. 1. Social services are those services which indirectly support the economic system.
    2. These services help the economic system from inside. 2. The services help the economic system from outside.
    3. Examples: Transport, communication, trade, etc. 3. Examples: Health, education, etc.

  3. Give reasons why the tertiary sector is becoming the most important in India.

    Answer: The major factors leading to the rapid growth and importance of the service sector in India are:
    (a) Liberalisation and Economic Reforms: Reforms initiated in 1991 removed restrictions on the movement of labour and capital, leading to a huge inflow of foreign capital and outsourcing to India.
    (b) Advanced Technology: Advancements in the IT sector, internet, and telecommunication contributed massively to this growth.
    (c) Cheap Labour and Skill: The availability of cheap labour and a reasonable degree of skilled manpower made India a profitable destination for outsourcing.
    (d) Rising Demand for Services: With increasing income levels, people have started demanding more services like eating out, tourism, private hospitals, and educational institutions.
    (e) Increased Volume of Trade: Low tariff and non-tariff barriers on imports are also responsible for increased volume of trade, which requires more services.

  4. Discuss the role of service sector in terms of the following:
    (a) National Income
    (b) Share in Employment

    Answer:
    (a) National Income: The service sector presently is the largest sector of the Indian economy. It contributes 54 per cent share in the country's national income (2018-19), growing from 28 per cent in 1950-51. It has become the largest contributor to India's National Income because of an increase in demand for end use services like transportation, communication, health, and education.
    (b) Share in Employment: The tertiary sector employs about 33 per cent of the labour force. Its share in employment has increased from 17 per cent in 1950-51 to 32 per cent in 2018-19. It employs people directly linked to services (like transport and storage) as well as those who are indirectly helping (like teachers, doctors, lawyers, and IT professionals).

QUESTION BANK

  1. What is service sector?

    Answer: Service sector produces services instead of goods. It covers a wide range of services such as trading, storage, insurance, transportation, communication, financial, real estate and various types of professional services.

  2. How is the service sector classified?

    Answer: Service sector is classified into (i) Productive and (ii) Consumer services. It can also be divided into (i) Economic services and (ii) Social services.

  3. What are productive services?

    Answer: Productive services are all those services which raise the productivity of producing sectors namely primary sector and secondary sector.

  4. What are consumer services? Give their examples.

    Answer: Consumer services are those services which directly satisfy human wants.
    Examples: Health, Education.

  5. What do you understand by economic services?

    Answer: Economic services refer to all those services that directly support the system of production and distribution.

  6. What do you mean by social services?

    Answer: Social services are all those services which support the economic system/process from outside.

  7. What is the importance of service sector? Give two points.

    Answer:
    (i) It provides transportation services to the primary and secondary sectors of the economy.
    (ii) It improves the efficiency of workforce.

  8. Explain how does agriculture contribute to industry?

    Answer:
    (i) Agriculture provides raw material to some agro-based industries like cotton, jute, sugarcane, oilseeds, etc.
    (ii) It supplies food for the industrial workers.

  9. Explain how does industry contribute to agriculture.

    Answer:
    (i) Industry provides several agricultural inputs like chemical fertilisers, pump-set, tractors, etc.
    (ii) Industry provides employment to surplus people from agricultural sector.

  10. Explain how does agriculture depend on service sector.

    Answer:
    (i) Service Sector provides banking and other financial services and internal trade facilities for the agricultural sector.
    (ii) It provides transportation services to agriculture.

  11. Service industry/sector in India is becoming the mainstay of the Indian economy" Comment.

    Answer:
    • Service sector holds the highest share in the country's GDP.
    • Service sector in India has become extremely important not only in terms of GDP, but it is a key factor for employment generation.
    • The service sector is the largest recipient of Foreign Direct Investment in India.

  12. Distinguish between economic services and social services by giving suitable examples.

    Answer:
    Economic Services Social Services
    1. Economic services are those services which directly contribute to the production and distribution of goods. 1. Social services are those services which indirectly support the economic system.
    2. These services help the economic system from inside. 2. The services help the economic system from outside.
    3. Examples: Transport, communication, trade, etc. 3. Examples: Health, education, etc.
Quick Navigation:
Quick Review Flashcards - Click to flip and test your knowledge!
Question
What is the definition of the 'Service Sector'?
Answer
The part of the economy that produces services instead of physical goods.
Question
By what alternative name is the service sector commonly known?
Answer
The Tertiary Sector.
Question
What distinguishes services from physical products?
Answer
Services are non-physical products that cannot be touched or stored.
Question
Which specific services are classified as 'Productive services'?
Answer
Activities that serve as an aid in production processes, such as trading and transport.
Question
Which type of services directly satisfy human wants and may not help in the production of goods?
Answer
Consumer services.
Question
Give an example of a consumer service as mentioned in the text.
Answer
Education (or health services/domestic servants).
Question
Which category of services includes the infrastructural facilities necessary for economic growth?
Answer
Economic services.
Question
Which category of services includes the infrastructural facilities necessary for human development?
Answer
Social services.
Question
List two examples of 'Economic services'.
Answer
Power and irrigation (or transport/communication/banking).
Question
List two examples of 'Social services'.
Answer
Health and education (or housing).
Question
How do social services like health facilitate economic growth?
Answer
By increasing the efficiency of labour.
Question
The service sector is considered the _____ in the socio-economic development of a nation.
Answer
Backbone.
Question
In 1950-51, what was the percentage share of the service sector in India's national income?
Answer
$28\%$.
Question
In 2018-19, what was the percentage share of the service sector in India's national income?
Answer
$54\%$.
Question
Which sector is currently the largest contributor to India's national income?
Answer
The service sector.
Question
Which sector's share in India's national income dropped from $59\%$ in 1950-51 to $16\%$ in 2018-19?
Answer
The primary sector.
Question
What percentage of the Indian labour force was employed in the service sector in 2018-19?
Answer
$32\%$.
Question
What is the approximate current percentage of the labour force employed by the tertiary sector in India?
Answer
$33\%$.
Question
How do transport services support the primary sector?
Answer
They help to broaden the market for agricultural products.
Question
Why are banks essential for the development of both industry and agriculture?
Answer
They attract savings and provide loans for investment.
Question
How does a well-developed social infrastructure improve the economy's quality of life?
Answer
It improves the efficiency and ability of people to work.
Question
How can the expansion of infrastructural facilities reduce regional disparities?
Answer
By developing industrially backward regions of the country.
Question
Why is rural development impossible without transport and communication services?
Answer
They provide the necessary system to integrate and support the rural economy.
Question
In what year were the significant economic reforms that boosted India's service sector initiated?
Answer
$1991$.
Question
How did liberalisation facilitate the inflow of foreign capital into India's service sector?
Answer
By removing various restrictions on the movement of labour and capital.
Question
Which technological advancement enabled electronic transactions across different countries?
Answer
The internet (or advancements in the IT sector).
Question
What two factors made India a favourite destination for outsourcing services?
Answer
Availability of cheap labour and a reasonable degree of skilled manpower.
Question
Give an example of a service that has seen rising demand due to increased income levels.
Answer
Eating out (or tourism/shopping/private hospitals).
Question
How did trade reforms contribute to the growth of the service sector?
Answer
Through low tariffs and non-tariff barriers on imports.
Question
How does the agricultural sector provide for the urban population in the service sector?
Answer
By providing various food items.
Question
What does the service sector provide to the agricultural sector for its development?
Answer
Trading, banking, and other financial services.
Question
Where do railways and roadways get the bulk of their business from in the primary sector?
Answer
The movement of agricultural products.
Question
From which sector does the service sector obtain unskilled and skilled workers for petty trading?
Answer
The agricultural sector.
Question
List a manufactured product that service sector workers depend on from the industrial sector.
Answer
Computers (or printers/paper/furniture/air-conditioners).
Question
What are the four main categories of activities included in the Indian service sector?
Answer
(i) Trade, Hotels and Restaurants; (ii) Transport, Storage and Communication; (iii) Banking, Insurance, Real Estate and Business Services; (iv) Community, Social and Personal Services.
Question
What is the difference between internal and external trade?
Answer
Internal trade occurs within the country, while external trade refers to exchange between different countries.
Question
Name a public sector enterprise engaged in trading activities in India.
Answer
State Trading Corporation (or Minerals and Metals Trading Corporation).
Question
Which sub-sector of the service sector includes cold storage facilities?
Answer
Transport, Storage and Communication.
Question
Name two private sector companies providing telecommunication services in India.
Answer
VI (Vodafone Idea) and Airtel.
Question
Which government department is responsible for postal and telegraph services in India?
Answer
The Indian Posts and Telegraph Department.
Question
List two public sector commercial banks in India.
Answer
State Bank of India and Punjab National Bank.
Question
List two private sector commercial banks in India.
Answer
ICICI Bank and HDFC Bank.
Question
Which bank specifically provides services for agriculture and rural development?
Answer
National Bank for Agriculture and Rural Development (NABARD).
Question
What does the 'Real estate service' involve?
Answer
The purchase and sale of land and house property.
Question
Name a public sector insurance provider in India.
Answer
LIC (Life Insurance Corporation) or GIC (General Insurance Corporation).
Question
List three examples of services classified as 'Community, Social and Personal Services'.
Answer
Health facilities, education, and police service (or defence/sanitation).
Question
Professionals such as lawyers, doctors, and engineers are included in which service category?
Answer
Personal services.
Question
Which sector is the largest recipient of Foreign Direct Investment (FDI) in India?
Answer
The service sector.
Question
Economic services directly support the system of production and _____.
Answer
Distribution of goods.
Question
How do social services support the economic system compared to economic services?
Answer
Social services support the system from the outside, while economic services support it from the inside.
Question
Services like street hawkers and domestic servants are classified as _____ services.
Answer
Personal.
Question
Which sub-sector includes the Central Warehousing Corporation?
Answer
Transport, Storage and Communication.
Question
Identify one private sector insurance company mentioned in the text.
Answer
Tata AIG (or Bajaj Allianz/Reliance).
Question
The phenomenal growth of the service sector in India is largely attributed to the _____ of $1991$.
Answer
Economic reforms.
Question
Concept: Interdependence of Sectors
Answer
Definition: The mutual reliance between primary, secondary, and tertiary sectors where each provides essential inputs or markets for the others.
Question
Which sector provides the highest share of GDP in India but is not the largest employer?
Answer
The service sector.
Question
Services are described as non-physical products that cannot be touched, also known as _____ products.
Answer
Intangible.
Question
Which category of services includes sanitation facilities and drinking water?
Answer
Community services.
Question
The service sector share in employment rose from $17\%$ in 1950-51 to _____ in 2018-19.
Answer
$32\%$.
Question
In terms of sectoral share in national income, which sector had $30\%$ in 2018-19?
Answer
The secondary sector.