Chapter 2 - Sectors of the Indian Economy
An economy is best understood by studying its components or sectors. So, in Vidyakul CBSE Notes Class 10 Economics Chapter 2 - Indian Economics, you will learn 3 types of economy: primary/secondary/tertiary, organized/unorganized, and public/private. To better understand this chapter, relate the topic to your daily life. On this note, some basic concepts such as Gross Domestic Product, Employment, etc. are also introduced.
Sectors of Economic Activity
Sectors define the major sectors of the economy in which businesses use the same or related products or services.
When natural resources are extracted and harvested to produce commodities, this is referred to as the primary sector. Examples: agriculture, forestry, hunting, fishing, and mining.
The secondary sector deals with activities in which natural products are transformed into other forms through production methods. This is the next step after the main one. This requires some manufacturing processes. Also called the industrial park. For example, cotton fibers from factories are used to spin yarn to weave cloth. Sugar cane is used as raw material to produce sugar or gur.
The tertiary sector includes activities that help develop primary and secondary sectors. These activities do not in themselves produce goods but help or support the production process. Also called the service industry. Examples: teachers, doctors, laundresses, hairdressers, shoemakers, lawyers, call centers, software companies, etc.
Comparison of three sectors
The value of final goods and services produced by each sector during a given year represents the sector that produced this year. The sum of the three sectors' production gives the country's Gross Domestic Product (GDP).
The graph below shows the production of goods and services in the three sectors.
In 2013-2014, the tertiary sector replaced the primary sector, becoming the largest manufacturing sector in India.
Services such as hospitals, educational institutions, post and telegraph, police stations, courts, town administration, municipal enterprises, defense, transportation, banking, insurance companies, etc. It is considered a basic service and is required by everyone.
The development of agriculture and industry leads to the development of services such as transportation, trade, and warehouses. , vocational training, etc.
Over the past decade, several new services based on information and communication technologies have become important and necessary.
Where are Most People Employed
Primary Sector | Secondary Sector | Tertiary Sector |
More than half of the workers in India are working in the primary sector, mainly in agriculture. | These sectors employ less than half the people as compared to the primary sector./p> | |
It contributes to only a quarter of the GDP. | These sectors produce four-fifths of the product. | |
How to create more jobs
Jobs can be created for everyone by identifying, promoting, and locating industries and services in semi-rural areas. Each state or region has the potential to increase income and employment for the people in that area. This can be done through tourism, regional handicrafts, or new services such as IT. A study by the Planning Commission (known as NITI Aayog) estimated that nearly 20 million jobs could be created in the education sector alone.
The central government of India has enacted a law to exercise the right to work in about 625 districts of India, this law is known as the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) 2005. According to MGNREGA 2005, all people who can and need jobs in rural areas are guaranteed by the government 100 working days per year. If the government fails in its duty to provide jobs, it will pay unemployment benefits to the people.
Division of Sectors As Organised and Unorganised
Organized Sector | Unorganized Sector |
It is a sector where the employment terms are fixed and regular, and the employees get assured work. | The unorganized sector is characterized by small and scattered units, which are largely outside the control of the government. |
They are registered by the government and have to follow its rules and regulations, which are given in various laws such as the Factories Act, Minimum Wages Act, Payment of Gratuity Act, Shops and Establishments Act, etc. | There are rules and regulations but these are not followed since they are not registered with the government. |
The job is regular and has fixed working hours. If people work more, they get paid for overtime by the employer. | Jobs are low-paid and often not regular. |
Workers enjoy the security of employment. | Employment is not secure. People can be asked to leave without any reason. |
People working in the organized sector get several other benefits from the employers such as paid leave, payment during holidays, provident fund, gratuity, etc. | There is no provision for overtime, paid leave, holidays, leave due to sickness, etc. |
People get medical benefits. The factory manager has to ensure facilities like drinking water and a safe working environment. When they retire, these workers get pensions as well. | There are no such facilities in the unorganized sector. |
Examples of the organized sectors are Government employees, registered industrial workers, Anganwadi workers, village health workers, etc. | Examples of unorganized sectors are Shopkeeping, Farming, Domestic work, Labouring, Rickshaw pulling, etc. |
How to Protect Workers in Unorganised Sector
There is a need for protection and support of the workers in the unorganized sector. Here are a few points which will help in doing so.
The government can fix the minimum wage rate and working hours.
The government can provide cheap loans to self-employed people.
Government can provide cheap and affordable basic services like education, health, and food to these workers.
The government can frame new laws which can provide provisions for overtime, paid leave, leave due to sickness, etc.
Sectors in Term of Ownership: Public and Private Sectors
Public Sector | Private Sector |
In the public sector, the government owns most of the assets and provides all the services. | In the private sector, ownership of assets and delivery of services are in the hands of private individuals or companies. |
Railways or post offices are examples of the public sector. | Companies like Tata Iron and Steel Company Limited (TISCO) or Reliance Industries Limited (RIL) are privately owned companies. |
The purpose of the public sector is not just to earn profits. Its main aim is public welfare. | Activities in the private sector are guided by the motive to earn profits. |
Government Responsibilities
There are many activities that are the primary responsibilities of the government. We have listed some of them here.
The government collects money through taxes and other means to cover the cost of services provided by the government. The government must carry out large expenditures such as building roads, bridges, railways, and ports, generating electricity, and providing irrigation through dams. There are several activities that the government should support to encourage the private sector to continue producing or doing business. The Indian government buys wheat and rice from farmers at a "fair price" and sells it to consumers through grocery stores at a lower price. Thus, it supports both farmers and consumers. It is the government's responsibility to administer adequate schools and provide quality education, health care, and educational facilities for all.
Governments must also pay attention to aspects of human development, such as safe drinking water, housing for the poor, food and nutrition, and caring for the poorest and most marginalized areas.
Frequently Asked Questions on CBSE Class 10
What are the uses of ‘Foreign trade’?
1. Increased revenue
2. Decreased competition
3. Longer product lifespan
4. Better risk management
5. Promotes efficiency in production
What is the role of ‘Industrial development’?
Industrial development helps in the rapid growth of national and per capita income.
What is ‘GDP’?
Gross domestic product (GDP) is a measurement that seeks to capture a country’s economic output.
