Sectors of the Indian Economy Notes Class 10

Sectors of the Indian Economy Notes (Chapter 2 Economics Ncert)

There are three sectors of indian economy.

1. Primary sector
2. Secondary sector
3. tertiary sector

Sectors of indian economy

    1. Primary sector 

• When we produce a good by exploiting natural resources, it is an activity of the primary sector.
• This is because it forms the base for all other products that we subsequently make.
• Cotton and milk are examples of primary sector.
• Since most of the natural products we get are from agriculture, dairy, fishing, forestry, this sector is also called agriculture and related sector.

    2. Secondary sector 

• The secondary sector covers activities in which natural products are changed into other forms through ways of manufacturing that we associate with industrial activity.
• It is the next step after primary.
• For example, using cotton fibre from the plant, we spin yarn and weave cloth. Using sugarcane as a raw material, we make sugar orgur.
• Since this sector gradually became associated with the different kinds of industries that came up, it is also called as industrial sector.

    3. Tertiary Sector

• After primary and secondary, there is a third category of activities that falls under tertiary sectorand is different from the above two.
• These are activities that help in the development of the primary and secondary sectors. These activities, by themselves, do not produce a good but they are an aid or a support for the production process.
• For example, goods that are produced in the primary or secondary sector would need to be transported by trucks or trains and then sold in wholesale and retail shops.
• Transport, storage, communication, banking, trade are some examples of tertiary activities. Since these activities generate services rather than goods, the tertiary sector is also called the service sector.

Service sector also includes some essential services that may not directly help in the production of goods. For example, we require teachers, doctors, and those who provide personal services such as washermen, barbers, cobblers, lawyers, and people to do administrative and accounting works.

    Comparing the three Sectors

• The value of final goods and services produced in each sector during a particular yearprovides the total production of the sector for that year.
• And the sum of production in the three sectors gives what is called the Gross Domestic Product (GDP) of a country.
• It is the value of all final goods and services produced within a countryduring a particular year. GDP shows how big the economy is.

In India, the mammoth task of measuring GDP is undertaken by a central government ministry. This Ministry, with the help of various government departments of all the Indian states and union territories, collects information relating to total volume of goods and services and their prices and then estimates the GDP.

    Rising Importance of the Tertiary Sector in Production

In the year 2011-12, the tertiary sector has emerged as the largest producing sector in India replacing the primary sector.

Why is the tertiary sector becoming so important in India? There could be several reasons.

1. First, 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.
2. Second, the development of agriculture and industry leads to the development of services such as transport, trade, storage etc.
3. Third, as income levels rise, certain sections of people start demanding many more services like eating out, tourism, shopping, private hospitals, private schools, professional training etc.
4. Fourth, over the past decade or so, certain new services such as those based on information and communication technology have become important and essential. The production of these services has been rising rapidly.

     Underemployment

Underemployment is a hidden kind of unemployment. Each one is doing  some work but no one is fully employed. This is the situation of underemployment, 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 and is clearly visible as unemployed. Hence, it is also called disguised unemployment.

This means that even if we remove a lot of people from agricultural sector and provide them with proper work elsewhere, agricultural production will not suffer.

Underemployment can be also seen in tertiary Sector . They may spend the whole day but earn very little. They are doing this work because they do not have better opportunities. 

    Creating More Employment

• Along with water, we also need to provide cheap agricultural credit to the farmers for farming to improve.
• Identify, promote and locate industries and services in semi-rural areas where a large number of people may be employed.
• Opening a cold storage could give an opportunity for farmers to store their products like potatoes and onions and sell them when the price is good.
• In villages near forest areas, we can start honey collection centres where farmers can come and sell wild honey.
• It is also possible to set up industries that process vegetables and agricultural produce like potato, sweet potato, rice, wheat, tomato, fruits, which can be sold in outside markets.
• This will provide employment in industries located in semi-rural areas and not necessarily in large urban centres.
• Planning Commission (now known as NITI Aayog) estimates that nearly 20 lakh jobs can be created in the education sector alone.
• Similarly, if we are to improve the health situation, we need many more doctors, nurses, health workers etc. to work in rural areas.
• Study by the Planning Commission says that if tourism as a sector is improved, every year we can give additional employment to more than 35 lakh people.

These are some ways by which we can create more employment.

    MGNREGA 2005

• The central government in India made a law implementing the Right to Work in about 625 districts of India.
• It is called Mahatma Gandhi National Rural Employment Guarantee Act 2005 (MGNREGA 2005). 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.
• 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

• Organised sector covers those enterprises or places of work where the terms of employment are regular and therefore, people have assured work. 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.
• It is called organised because it has some formal processes and procedures. Some of these people may not be employed by anyone but may work on their own but they too have to register themselves with the government and follow the rules and regulations.

• Workers in the organised sector enjoy security of employment.
• They are expected to work only a fixed number of hours.
• If they work more, they have to be paid overtime by the employer. They also get several other benefits from the employers.
• They get paid leave, payment during holidays, provident fund, gratuity etc.
• They are supposed to get medical benefits and, under the laws, the factory manager has to ensure facilities like drinking water and a safe working environment.
• When they retire, these workers get pensions as well.

Unorganised Sector

• The unorganised sector is characterised by small and scattered units which are largely outside the control of the government.
• There are rules and regulations but these are not followed. Jobs here are low-paid and often not regular.
• There is no provision for overtime, paid leave, holidays, leave due to sickness etc.
• Employment is not secure. People can be asked to leave without any reason. When there is less work, such as during some seasons, some people may be asked to leave. A lot also depends on the whims of the employer.
• This sector includes a large number of people who are employed on their own doing small jobs such as selling on the street or doing repair work. Similarly, farmers work on their own and hire labourers as and when they require.

    How to Protect Workers in the Unorganised Sector?

In the rural areas, the unorganised sector mostly comprises of landless agricultural labourers, small and marginal farmers, sharecroppers and artisans (such as weavers, blacksmiths, carpenters and goldsmiths).

In the urban areas, unorganised sector comprises mainly of workers in small-scale industry, casual workers in construction, trade and transport etc., and those who work as street vendors, head load workers, garment makers, rag pickers etc.

We also find that majority of workers from scheduled castes, tribes and backward communities find themselves in the unorganised sector.

    Sectors in terms of ownership: Public and Private Sectors

There are two sectors in the term of ownership:-

1. Public sector
2. Private sector

1. Public sector

• In the public sector, the government owns most of the assets and provides all the services.
• Railways or post office is an example of the public sector

2. Private sector

• In the private sector, ownership of assets and delivery of services is in the hands of private individuals or companies.
• Companies like Tata Iron and Steel Company Limited (TISCO) or Reliance Industries Limited (RIL) are privately owned.