SECTORS OF THE INDIAN ECONOMY - Q&A
LET'S WORK THESE OUT
1. Complete the above table to show how sectors are dependent on each other.
(Note: The table provides examples. Here are the completed explanations based on the context.)
Example 1: Imagine what would happen if farmers refuse to sell sugarcane to a particular sugar mill. The mill will have to shut down.
What does this show? This is an example of the secondary or industrial sector being dependent on the primary sector for raw materials.
Example 2: Imagine what would happen to cotton cultivation if companies decide not to buy from the Indian market and import all cotton they need from other countries. Indian cotton cultivation will become less profitable and the farmers may even go bankrupt, if they cannot quickly switch to other crops. Cotton prices will fall.
What does this show? This shows that the primary sector (agriculture) is dependent on the secondary/tertiary sector (market demand and buying decisions of companies).
Example 3: Farmers buy many goods such as tractors, pumpsets, electricity, pesticides and fertilisers. Imagine what would happen if the price of fertilisers or pumpsets go up. Cost of cultivation of the farmers will rise and their profits will be reduced.
What does this show? This shows that the primary sector is dependent on the secondary sector for inputs (machinery, fertilizers, etc.).
Example 4: People working in industrial and service sectors need food. Imagine what would happen if there is a strike by transporters and lorries refuse to take vegetables, milk, etc. from rural areas. Food will become scarce in urban areas whereas farmers will be unable to sell their products.
What does this show? This shows that the primary sector (farmers) and secondary/tertiary sector workers (consumers) are both dependent on the tertiary sector (transport services).
2. Explain the difference between primary, secondary and tertiary sectors using examples other than those mentioned in the text.
Primary Sector: Involves the production of goods by directly exploiting natural resources.
Example: Coal Mining (extracting minerals from the earth).
Secondary Sector: Involves processing natural resources into other forms through manufacturing.
Example: Paper Industry (processing bamboo or wood pulp into paper).
Tertiary Sector: Involves activities that support the production process and provide services rather than goods.
Example: Advertising (helping companies sell their products).
3. Classify the following list of occupations under primary, secondary and tertiary sectors:
Primary Sector:
- Flower cultivator (Agriculture)
- Fishermen (Fishing)
- Gardener (Horticulture/Agriculture)
- Bee-keeper (Agriculture/Animal Husbandry)
Secondary Sector:
- Basket weaver (Manufacturing/Craft)
- Workers in match factory (Manufacturing)
- Potter (Manufacturing - making pots from clay)
Tertiary Sector:
- Tailor (Service - strictly speaking, can be secondary, but often classified as personal service in this context)
- Milk vendor (Trade/Service - selling milk)
- Priest (Community/Social Service)
- Courier (Communication/Transport Service)
- Moneylender (Financial Service)
- Astronaut (Scientific Service)
- Call centre employee (IT Enabled Service)
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 used is the level of education and the age group of the students.
Yes, this is a useful classification because:
1. It helps in designing an age-appropriate curriculum and teaching methods.
2. It helps in the administration and management of the school infrastructure.
3. It allows for assessing the developmental stages of children effectively.
LET'S WORK THESE OUT
1. What does the history of developed countries indicate about the shifts that have taken place between sectors?
The history of developed countries indicates a specific pattern of shift:
1. Initial Stage: The Primary sector was the most important sector of economic activity.
2. Second Stage: With the rise of factories and manufacturing, the Secondary sector became the most important in total production and employment.
3. Third Stage: In the past 100 years, there has been a further shift to the Tertiary (Service) sector, which has become the most important in terms of total production and employment.
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.
Corrected arrangement:
To count goods and services, we should not add the numbers that are produced (to avoid double counting). We count only the value of final goods and services produced in the particular year (not last five years). The sum of production in the three sectors gives the GDP.
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.
To calculate the total value using the value-added method, we sum up the value added at each stage of production.
Value Added = Value of Output - Cost of Intermediate Goods.
Example (Biscuit):
1. Farmer produces wheat: Value Rs 20. (Value added = 20)
2. Miller makes flour: Sells for Rs 25. (Value added = 25 - 20 = Rs 5)
3. Baker makes biscuits: Sells for Rs 80. (Uses flour + sugar/oil worth Rs 15 = Input Rs 40. Value added = 80 - 40 = Rs 40).
Total Value of Final Good = Sum of value added? No, the final price (Rs 80) represents the total value. The method ensures we don't count the wheat (20) + flour (25) + biscuits (80) = 125, which is wrong. We only count the final value Rs 80.
LET'S WORK THESE OUT
(Based on Graph 1: GVA by Primary, Secondary and Tertiary Sectors)
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?
The Tertiary Sector has grown the most over forty years.
4. What was the GDP of India in 2017-18?
Based on Graph 1, the total GVA (which is close to GDP) in 2017-18 corresponds to the top of the bar, which is approximately Rs. 1,20,00,000 Crores (or Rs. 120 Lakh Crores).
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.
TABLE 2.2 SHARE OF PRIMARY SECTOR IN GDP AND EMPLOYMENT
(Values are approximate based on visual interpretation of the graphs)
Share in Gross Value Added (GVA) %:
1977-78: 40%
2017-18: 15% (approx)
Share in employment %:
1977-78: 71%
2017-18: 44%
What are the changes that you observe in the primary sector over a span of forty years?
The share of the primary sector in production (GVA) has fallen drastically (from ~40% to ~15%), but the share in employment has not fallen as much (from 71% to 44%). This indicates that a large number of workers are still trapped in the primary sector despite its lower contribution to the economy, leading to disguised unemployment.
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
(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?
Pattern in Developed Countries: As production shifted from primary to secondary and then to tertiary, the workforce also shifted accordingly. Industrialization absorbed the labor from agriculture.
Pattern in India: While the share of production shifted from primary to tertiary (skipping a massive industrial phase), the employment did not shift at the same pace. The primary sector still employs about 44% of the workforce.
Desired Change: It was desired that the secondary and tertiary sectors would create enough jobs to absorb the surplus labor from agriculture, reducing the dependency on the primary sector. This did not happen effectively.
4. Why should we be worried about underemployment?
We should be worried about underemployment because:
1. It represents a waste of human potential and resources.
2. People earn less than their potential, leading to poverty and low standards of living.
3. It lowers the overall productivity of the economy.
LET'S WORK THESE OUT
1. Why do you think MGNREGA 2005 is referred to as 'Right to work'?
It is referred to as 'Right to Work' because the Act legally guarantees 100 days of wage employment in a year to every rural household that demands work. If the government fails to provide employment within 15 days, it must provide 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.
Activities that can be taken up:
1. Construction of check dams and water harvesting structures: This improves irrigation, allowing farmers to grow more crops.
2. Desilting of tanks and ponds: Improves water storage.
3. Construction of rural roads: Improves connectivity to markets.
4. Land leveling: Makes land more suitable for cultivation.
3. How would income and employment increase if farmers were provided with irrigation and marketing facilities?
Irrigation: Farmers can grow crops during the dry season (Rabi) or grow multiple crops in a year. This increases agricultural output and creates more employment on the farm itself.
Marketing Facilities: Better roads and storage allow farmers to sell their produce at better prices in markets. This encourages production and creates jobs in transport, trade, and storage (Tertiary sector).
4. In what ways can employment be increased in urban areas?
1. Promotion of Small Scale Industries: Providing cheap credit and infrastructure to small businesses.
2. Improving Tourism: Developing tourist spots can create many service jobs.
3. IT and Services: Encouraging BPOs and IT services.
4. Infrastructure Projects: Construction of roads, bridges, and housing creates massive casual employment.
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 a bag of cement on his back in a market
(iii) A farmer irrigating her field
(v) A daily wage labourer working under a contractor
(vii) A handloom weaver working in her house
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.
Organised Sector Worker: Has job security, fixed working hours, paid holidays, provident fund, medical benefits, and an appointment letter.
Unorganised Sector Worker: Has no job security, irregular wages, no paid leave, no medical benefits, and works long hours without overtime pay.
3. How would you distinguish between organised and unorganised sectors? Explain in your own words.
Organised Sector: Places of work where terms of employment are regular. They are registered by the government and follow rules like the Factories Act. Workers have security and benefits.
Unorganised Sector: Small and scattered units outside government control. Rules exist but are not followed. Jobs are low-paid, irregular, and insecure. No benefits like paid leave or pension.
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.
TABLE 2.3 WORKERS IN DIFFERENT SECTORS (IN MILLIONS)
Missing Data Calculation:
Total Primary: 1 + 232 = 233
Total Unorganised: 232 + 74 + 88 = 394
Total Organised: 1 + 41 + 40 = 82
Grand Total: 233 + 115 + 128 = 476
What is the percentage of people in the unorganised sector in agriculture?
Percentage = (232 / 233) * 100 = 99.57%
Do you agree that agriculture is an unorganised sector activity? Why?
Yes, largely. As the data shows, over 99% of agricultural workers are in the unorganised sector. It involves small farmers and landless labourers who are not registered with the government and do not get formal employment benefits.
If we look at the country as a whole, we find that 82.7% of the workers in India are in the unorganised sector. Organised sector employment is available to only about 17.2% of the workers in India.
(Calculation: Unorganised % = 394/476 * 100 = 82.7%. Organised % = 82/476 * 100 = 17.2%)
LET'S RECALL
Table 2.4 Classifying Economic Activities
Row 1: Primary, Secondary, Tertiary
Criteria used: Nature of activity
Most important conclusion: Production has shifted to Tertiary, but employment remains in Primary.
Problems indicated and how they can be tackled: Underemployment in agriculture. Tackle by creating jobs in industry and services, and improving rural infrastructure.
Row 2: Organised, Unorganised
Criteria used: Employment conditions / Regulations
Most important conclusion: Majority of workers are in the unorganised sector with poor conditions.
Problems indicated and how they can be tackled: Workers are exploited (low wages, no security). Tackle by stricter laws, government support, and social security schemes.
Row 3: Public, Private (Added based on context)
Criteria used: Ownership of assets
Most important conclusion: Public sector provides essential services; Private sector works for profit.
Problems indicated and how they can be tackled: Private sector may not provide affordable basic services. Tackle by government spending on health, education, and infrastructure.
EXERCISES
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. (has / has not)
(ii) Workers in the tertiary sector do not produce goods. (tertiary / agricultural)
(iii) Most of the workers in the organised sector enjoy job security. (organised / unorganised)
(iv) A large proportion of labourers in India are working in the unorganised sector. (large / small)
(v) Cotton is a natural product and cloth is a manufactured product. [natural / manufactured]
(vi) The activities in primary, secondary and tertiary sectors are interdependent [independent / 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
(i) primary
(ii) secondary
(iii) tertiary
(iv) information technology
(i) primary sector.
(c) GDP is the total value of
(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 produced during a particular year.
(d) In terms of GVA the share of tertiary sector in 2017-18 is between
(i) 20 to 30 per cent
(ii) 30 to 40 per cent
(iii) 50 to 60 per cent
(iv) 60 to 70 per cent
(iii) 50 to 60 per cent. (Based on Graph 2, the tertiary sector bar ranges roughly from 45% to 100%, indicating a share of approx 55%).
3. Match the following:
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
Odd one: Potter.
Reason: A potter produces a tangible good (secondary sector/manufacturing), whereas the tourist guide, dhobi, and tailor (in the context of service/repair) provide services (tertiary sector).
(ii) Teacher, doctor, vegetable vendor, lawyer
Odd one: Vegetable vendor.
Reason: The vegetable vendor typically works in the unorganised sector and is a low-skilled job, whereas the teacher, doctor, and lawyer are highly skilled professionals who usually work in the organised sector.
(iii) Postman, cobbler, soldier, police constable
Odd one: Cobbler.
Reason: The cobbler works in the private/unorganised sector (self-employed), while the postman, soldier, and police constable work for the public sector (government).
(iv) MTNL, Indian Railways, Air India, Jet Airways, All India Radio
Odd one: Jet Airways.
Reason: Jet Airways is a private sector enterprise, whereas MTNL, Indian Railways, Air India (historically in this context), and All India Radio are public sector enterprises.
5. A research scholar looked at the working people in the city of Surat and found the following.
(Table provided in question)
Complete the table. What is the percentage of workers in the unorganised sector in this city?
Completed Table:
- Organised: 15% (Offices/Factories) + 15% (Own shops with license) = 30%
- Unorganised: 20% (Street/Construction) + 50% (Small workshops, missing value) = 70%
Missing Value Calculation: 100 - (15 + 15 + 20) = 50.
Answer: The percentage of workers in the unorganised sector is 70% (20% + 50%).
6. Do you think the classification of economic activities into primary, secondary and tertiary is useful? Explain how.
Yes, it is useful.
1. It helps economists understand the structure of an economy and its stage of development.
2. It helps in calculating the contribution of each sector to the GDP.
3. It allows policymakers to identify which sector is lagging in growth or employment and create specific policies to support it.
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.
Why focus on Employment and GVA:
1. GVA (GDP): Tells us the size of the economy and the value of goods produced. It indicates economic growth.
2. Employment: Tells us how many people are earning a livelihood.
Comparing both helps us identify issues like "jobless growth," where GDP rises but employment doesn't (as seen in India).
Other issues to examine:
1. Regional Disparity: Is growth balanced across states?
2. Income Distribution: Is the wealth concentrated in a few hands?
3. Social Aspects: Working conditions, child labor, and environmental sustainability.
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.
(Student specific, but here is a general list)
List: Farmer, Carpenter, Software Engineer, Government Clerk, Shopkeeper, Hawker, Doctor, Factory Worker.
Classification:
1. By Nature: Primary (Farmer), Secondary (Factory Worker, Carpenter), Tertiary (Engineer, Doctor, Clerk, Shopkeeper).
2. By Employment Condition: Organised (Engineer, Clerk, Doctor in big hospital), Unorganised (Hawker, Farmer, Carpenter).
9. How is the tertiary sector different from other sectors? Illustrate with a few examples.
The tertiary sector is different because it does not produce any goods. Instead, it produces services that support the primary and secondary sectors.
Examples:
1. Transporting vegetables from a farm (Primary) to a market requires trucks (Tertiary).
2. A bank (Tertiary) provides loans to a factory (Secondary) to buy raw materials.
10. What do you understand by disguised unemployment? Explain with an example each from the urban and rural areas.
Disguised Unemployment: A situation where more people are engaged in a job than are actually required. Even if some are removed, production does not fall. They appear employed but are underemployed.
Rural Example: A family of 5 working on a small 2-hectare plot. Even if 2 people move out, the yield remains the same.
Urban Example: A plumber or painter who stands on the street daily waiting for work, or a shop with 3 brothers working where only 1 is needed to handle customers.
11. Distinguish between open unemployment and disguised unemployment.
Open Unemployment: When a person is willing and able to work but cannot find a job. They are clearly visible as unemployed (e.g., an educated youth looking for a job).
Disguised Unemployment: When a person is apparently working but is working less than their potential. Their unemployment is hidden (e.g., extra farm laborers).
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, I do not agree. The Tertiary sector plays a very significant role:
1. Contribution to GDP: It is the largest producing sector in India (over 50-60% of GVA).
2. Basic Services: It provides essential services like hospitals, education, and banking.
3. Support: It supports agriculture and industry through transport and trade.
4. New Jobs: IT and communication services are creating new employment opportunities.
13. Service sector in India employs two different kinds of people. Who are these?
1. Highly Skilled: A limited number of people with high education and skills, earning high incomes (e.g., IT professionals, doctors, lawyers).
2. Low Skilled/Unorganised: A very large number of workers engaged in small services, earning meager incomes and struggling for livelihood (e.g., shopkeepers, repairmen, transport drivers, vendors).
14. Workers are exploited in the unorganised sector. Do you agree with this view? Give reasons in support of your answer.
Yes, workers are exploited in the unorganised sector.
Reasons:
1. Low Wages: They are paid less than the minimum wage fixed by the government.
2. Job Insecurity: They can be fired without notice or reason.
3. No Benefits: They do not get paid leave, provident fund, or medical help.
4. Long Hours: They often work excessive hours without overtime pay.
15. How are the activities in the economy classified on the basis of employment conditions?
They are classified into:
1. Organised Sector: Registered by the government, follows rules/laws, provides job security and benefits.
2. Unorganised Sector: Small, scattered units, outside government control, rules not followed, no job security or benefits.
16. Compare the employment conditions prevailing in the organised and unorganised sectors.
(See Answer to Q2 and Q3 under "Let's Work These Out - Page 13" for detailed comparison on security, wages, and benefits).
17. Explain the objective of implementing the MGNREGA 2005.
The objectives are:
1. To provide livelihood security in rural areas by guaranteeing 100 days of wage employment in a year.
2. To reduce poverty and distress migration from rural to urban areas.
3. To create durable assets like roads and water conservation structures that aid sustainable development.
18. Using examples from your area compare and contrast that activities and functions of private and public sectors.
Public Sector: Owned by the government. Aim is public welfare.
Example: Government School (Fees are low, open to all).
Private Sector: Owned by individuals/companies. Aim is profit.
Example: Private International School (Fees are high, facilities are luxurious, aim is profit from education).
19. Discuss and fill the following table giving one example each from your area.
Public Sector:
Well managed: Delhi Metro (DMRC) - Efficient, clean.
Badly managed: Local Government Hospital (often overcrowded, lack of maintenance).
Private Sector:
Well managed: Infosys / Tata Motors - High profits, good employee care.
Badly managed: A local dyeing factory polluting the river and underpaying workers.
20. Give a few examples of public sector activities and explain why the government has taken them up.
Examples: Railways, Post Offices, Electricity generation, Government Schools.
Why:
1. High Cost: Developing railways or dams requires huge investment that private sector cannot afford.
2. Public Welfare: Services like health and education must be affordable for everyone, not just the rich.
3. Balanced Development: Government ensures services reach backward areas where private companies won't go due to lack of profit.
21. Explain how public sector contributes to the economic development of a nation.
1. Infrastructure: It builds roads, bridges, railways, and power plants which are the backbone of the economy.
2. Support to Industry: By providing cheap electricity and transport, it helps private industries grow.
3. Social Development: By investing in health and education, it improves the quality of the workforce (Human Capital).
22. The workers in the unorganised sector need protection on the following issues: wages, safety and health. Explain with examples.
1. Wages: Construction workers are often paid below minimum wage. They need protection to ensure fair pay.
2. Safety: Workers in cracker factories or mines work in dangerous conditions. They need strict safety laws to prevent accidents.
3. Health: Domestic workers or laborers have no sick leave. If they fall ill, they lose income. They need access to low-cost healthcare.
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?
Table Presentation:
| Sector | Workers | Income (Rs Million) |
|---|---|---|
| Organised | 4,00,000 | 32,000 |
| Unorganised | 11,00,000 | 28,000 |
| Total | 15,00,000 | 60,000 |
(Note: Org workers = 15L - 11L = 4L. Unorg Income = 60,000 - 32,000 = 28,000).
Ways to generate employment:
1. Government incentives for setting up new industries.
2. Providing loans to small businesses in the unorganised sector to expand.
3. Skill development programs to help unorganised workers move to better jobs.
24. The following table gives the GVA in Rupees (Crores) by the three sectors:
(Table provided in question)
(i) Calculate the share of the three sectors in GDP for 2000 and 2013.
Year 2000:
Total GDP = 12,56,000 + 10,12,000 + 18,17,000 = 40,85,000
Primary % = (12,56,000 / 40,85,000) * 100 = 30.74%
Secondary % = (10,12,000 / 40,85,000) * 100 = 24.77%
Tertiary % = (18,17,000 / 40,85,000) * 100 = 44.48%
Year 2013:
Total GDP = 17,87,000 + 24,59,000 + 46,30,000 = 88,76,000
Primary % = (17,87,000 / 88,76,000) * 100 = 20.13%
Secondary % = (24,59,000 / 88,76,000) * 100 = 27.70%
Tertiary % = (46,30,000 / 88,76,000) * 100 = 52.16%
(ii) Show the data as a bar diagram similar to Graph 2 in the chapter.
(Cannot draw here, but the bar diagram would show two stacked bars. For 2000: Bottom 30% Primary, Middle 25% Secondary, Top 45% Tertiary. For 2013: Bottom 20% Primary, Middle 28% Secondary, Top 52% Tertiary).
(iii) What conclusions can we draw from the bar graph?
1. The share of the Primary sector in GDP has decreased significantly (from ~31% to ~20%).
2. The share of the Tertiary sector has increased substantially (from ~44% to ~52%).
3. The Secondary sector has seen marginal growth. This confirms the trend that the Tertiary sector is becoming the most important sector in the Indian economy.