CBSE Class 10 Social Science Economics Sectors of the Indian Economy Assignment Set A

INTRODUCTION
The activities which are conducted with the objective to earn money are called Economic Activities.
Economic activities are classified in various groups according to their common attributes , which are known as sectors .

ECONOMIC ACTIVITIES
Activities which provides us income in return are known as economic activities.
The economic activities can be divided into three sectors- primary sector, secondary sector and tertiary sector.

(a) Primary sector :
There are many activities that are undertaken by directly using natural resources. When we produce a good by exploiting natural resources, it is an activity of the primary sector. It forms the base for all other products that we subsequently make. Agriculture, dairy, fishing, forestry are example of this sector. This sector is also called agriculture and related sector.

(b) Secondary sector :
Secondary sector covers activities in which natural products are changed into other forms through ways of manufacturing that we associate with industrial activity. The product is not produced by nature but has to be made and therefore some process of manufacturing is essential. This sector gradually became associated with the different kinds of industries that came up, it is also called as industrial sector.
For Example : Using cotton fibre form the plant, we spin, yarn and weave cloth.

(c) Tertiary sector (Service sector) :
These are activities that help in the development of the primary and secondary sectors. Tertiary sector do not produce a good but they support in production process. Since these activities generate services rather than goods, the tertiary sector is also called the service sector. In this sector services may be classified in two groups.
(i) Commercial services: It includes Banking, Insurance, Packing, Advertising, Communications, Transport, Railways, Internet cafe, ATM, Call centers etc.
(ii) Personal services: It includes Teaching, Nursing, Police, Medical, Entertainment, Barber, Cobblers, and Lawyers etc.

HOW DO WE COUNT THE TOTAL PRODUCTION IN EACH SECTOR
The values of goods and services are used rather than adding up the actual numbers. The value of goods and services in the three sectors are calculated, and then added up. Not every good (or service) that is produced and sold needs to be counted. It makes sense only to include the final goods and services. Intermediate goods are used up in producing final goods and services. The value of final goods already includes the value of all the intermediate goods that are used in making the final good. The value of final goods and services produced in each sector during a particular year provides 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. In India, the mammoth task of measuring GDP is undertaken by a central government ministry.

HISTORICAL CHANGE IN SECTORS
At initial stages of development, primary sector was the most important sector of economic activity.
As the methods of farming changed and agriculture sector began to prosper, it produced much more food than before. Many people could now take up other activities. Over a long time (more than hundred years), and especially because new methods of manufacturing were introduced, factories came up and started expanding. Those people who had earlier worked on farms now began to work in factories in large numbers. People began to use many more goods that were produced in factories at cheap rates. Secondary sector gradually became the most important in total production and employment. Hence, over time, a shift had taken place. This means that the importance of the sectors had changed.
In the past 100 years, there had been a further shift from secondary to tertiary sector in developed countries. The service sector has become the most important in terms of total production. Most of the working people are also employed in the service sector. This is the general pattern observed in developed countries.

RISING IMPORTANCE OF THE TERTIARY SECTOR IN PRODUCTION
Over the thirty years between 1970-71 and 2010-11, while production in all the three sectors has increased, it has increased the most in the tertiary sector. As a result, in the year 2010-11, the tertiary sector has emerged as the largest producing sector in India replacing the primary sector.
Graph 1 : Share of Sectors in GDP (%)

(i) Devepment of tertiary sector :
The government takes direct responsibility for the development of tertiary sector because it provides basic services to the people like hospitals, educational institutions, post offices, police stations, telegraph and telephone etc.

(ii) Primary and secondary enhanced tertiary sector :
The development of agriculture and industry has also led to the development of services like transport and trade.
(iii) Rise in income levels With the rise of income levels of the people, more and more services were demanded by the people like hotels, shipping, tourism, private schools and private hospitals.

(iv) New Services :
New services based on information and communication has become essential.

(v) Other services :
Many different kinds of people like shopkeepers, repair persons etc., transport persons engaged in different services are also growing rapidly.
However, not the entire service sector is growing equally well. There are a limited number of services that employ highly skilled and educated workers. There are a very large number of workers engaged in services such as small shopkeepers, repair persons, transport persons, etc.
These people barely manage to earn a living and yet they perform these services because no alternative opportunities for work are available to them. Hence, only a part of this sector is growing in importance.

(a) Role of tertiary sector in the Indian economy :
(i) LPG :
India is a developing country. Since 1991 India has adopted new economic policy–Globalisation, Liberalisation, Welcoming to MNCs and Foreign investment. Due to change of economic policies tertiary sector is growing in India. Basic amenities like education, health care services related with Information Technology, ATM booths, call centers etc. provide employment to educated Indians.
(ii) Share of tertiary sector increased :
The share of tertiary sector in GDP is growing day by day. The rate of growth of tertiary sector with other sectors in terms of GDP indicate clearly that share of tertiary sector in GDP (%) has increased greatly since last 40 years (from 1970 to 2010). In 1970 the share of tertiary sector in GDP was from 35 to 40%. It has increase in 2010 from 50 to 60%.
(iii) Employment increased:
The share of tertiary sector in employment (%) has also increased in last 40 years. In 1970, share was nearly 10 to 15% but it has increased from 30 to 35% in 2010. Though tertiary sector is not playing the role of providing employment over expectation, the primary sector continues to be the largest employer even in the year 2000.
(iv) Efficiency of people :
Tertiary services increase efficiency of people.
(v) Information and knowledge :
They provide the countrymen necessary information and knowledge.
(b) Reasons for increase in the service employment throughout the work: 
(i) Rising per capita income in the developed countries has generated proportionately larger increase in the demand for many kinds of services specially health care, entertainment and transport.
(ii) The increasing value of time has led to more household functions being accomplished outside of home.
(iii) Medical services as a proportion of Gross National Product (GNP) in a year, have increased steadily in Europe, North America and Japan.
(iv) There is also demand for medical care from elderly people.
(v) There is demand for educational services at all levels with the increase in demand for literacy and computer skills at workplaces.

WHERE ARE MOST OF THE PEOPLE EMPLOYED
A remarkable fact about India is that while there has been a change in the share of the three sectors in GDP, a similar shift has not taken place in employment. Not enough jobs were created in the secondary and tertiary sectors. Even though industrial output or the production of goods went up by eight times during 1975–2000, employment in the industry went up by only 2.5 times. The same applies to tertiary sector as well. While production in the service sector rose by 11 times, employment in the service sector rose less than three times. As a result, more than half of the workers in the country are working in the primary sector, mainly in agriculture, producing only a quarter of the GDP. In contrast to this, the secondary and tertiary sectors produce three – fourth of the produce whereas they employ less than half the people.

(a) “Majority of people in India are engaged in Primary services” :
India is a developing country. It has been declared by several economists of the world that in near future India will be super power. Still today most of the people in India are engaged in primary occupations because India provides all types of primary products to the world. Human occupation is influenced by geographical environment of a particular region. People living in different parts of the world choose from amongst their physical environment only that occupation which can easily support them and can meet all their material needs. India is engaged in their efforts to meet their basic needs and has no time to produce all the articles as surplus and has not made use of science and technology. The pace of development among developing countries is very slow, that is why a comparatively small number of people are engaged in tertiary occupations.

(b) Disguised/Under Unemployment :
Situations were 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 underemployment can also happen in other sectors. There are thousands of casual workers in the service sector in urban areas who search for daily employment. They are employed as painters, plumbers, repair persons and others doing odd jobs. Many of them don’t find work everyday. They are engaged in work where they may spend the whole day but earn very little. They are doing this work because they do not have better opportunities.

(c) Difference between open unemployment and disguised unemployment:
Open unemployment is different from disguised unemployment. Under open unemployment someone does not have a job and is clearly visible as unemployed. While under disguised unemployment situation we find hidden situation of unemployment. It is not clearly visible To understand differences between both types of unemployment – Open employment and disguised employment, we take following example.

For instance we can take the case of small farmer of a village. He owns nearly two hectares of unirrigated land. All seven members of his family work in the plot throughout the year . Why ? They have nowhere else to go for work. You will see that everyone is working, none remains idle, but in actual fact their labour effort gets divided. 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 some one who does not have a job and is clearly visible as unemployed. Hence, it is also called disguised unemployment.

HOW TO CREATE MORE EMPLOYMENT
(i) Improve agriculture Sector :
The government can spend some money or banks can provide a loan, to construct well or other irrigation facilities to irrigate the land. A dam can be constructed or canals can be dug to irrigate many farms. This could lead to a lot of employment generation within the agricultural sector itself reducing the problem of underemployment.
(ii) Transportation :
If the government invests some money in transportation and storage of crops, or makes better rural roads so that mini-trucks reach everywhere. This activity can provide productive employment to not just farmers but also others such as those in services like transport or trade.
(iii) Credit facilities :
The local bank should provide credit at a reasonable rate of interest, farmers will be able to buy seeds, fertilizers, agricultural equipments etc. in time and cultivate their land. We need to provide cheap agricultural credit to the farmers to improve farming.
(iv) Employment Opportunities :
Identify, promote and locate industries and services in semi–rural areas where a large number of people may be employed. This will provide employment in industries located in semi–rural areas and not necessarily in large urban centers.
(v) Other new services :
Tourism or regional craft industry, or new services like IT require proper planning and support from the government. Study by the Planning Commission say that if tourism as a sector is improved, every year we can give additional employment to more than 35 lakh people.

(a) National Rural Employment Guarantee Act 2005 (MNREGP) :
The central government in India recently made a law implementing the Right to Work in 625 districts of India. It is called National Rural Employment Guarantee Act 2005 (NREGA 2005). Under NREGA 2005, all those who are able to, and are in need of, work have been 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. The types of work that would help to increase the production from land in future will be given preference under the Act.

DIVISON OF SECTORS AS ORGANISED AND UNORGANISED
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. Workers in the organised sector enjoy security of employment. They are expected to work only a fixed number of hours.
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. 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.

(a) Workers in the unorganised sector need protection :
The workers in unorganised sector need protection from following three issues :
(i) Wages: Equal wages should be paid to both male and female workers. There should be increment as well as Dearness Allowance (DA) twice in a year as it is paid by the government.
(ii) Safety: The worker should be given safety in their employment as well as their body and mind. Generally no worker should be asked to leave his job and if he is asked to do so enough compensation should be provided to him or her. On duty or on going for duty or coming from working place if something goes wrong with the worker, the worker should be given economic protection and if necessary a job should be provided to his family member.
(iii) Health: Worker should be given free health care services, medicine, and medical checkup and nursing and doctors facilities. These facilities must be extended to his entire dependent.

(b) How to protect workers in the unorganised sector :
In the rural areas, the unorganised sector mostly comprises of landless agricultural labourers, small and marginal. Nearly 80 percent of rural households in India are in small and marginal farmer category. These farmers need to be supported through adequate facility for timely delivery of seeds, agricultural inputs, credit, storage facilities and marketing outlets.
In the urban areas, unorganised sector comprises mainly of workers in small-scale industry, casual workers in construction, trade and transport etc., and the workers who work as street vendors, head load workers, garment makers, rag pickers etc. Small-scale industry also needs government’s support for procuring raw material and marketing of output. The casual workers in both rural and urban areas need to be protected.

SECTORS IN TERMS OF OWNERSHIP: PUBLIC AND PRIVATE SECTORS

Industries can better be classified on the basis of their ownership under the following categories.:
(i) Public Sector Industries: Industries owned by the state or its agencies are called public sector industries. As for example, the Indian Railways, the Iron and Steel Industry at Bhilai and Durgapur etc., Oil India Ltd. are some such industries.
(ii) Private Sector Industries: Industries owned by individuals or firms formed by individuals are called private sector industries. For example, Tata Iron and Steel Company Limited or Reliance Industries Limited are private industries.

(a) Contribution of Public Sector to the Economic Development of a Nation:
It is quite necessary to have a public sector because of the following reasons:
(i) Reasonable Cost :
The public sector provides many essential things at quite a reasonable cost which the private sector can not provide.
(ii) Set up Heavy Industries :
The public sector can set up heavy industries which require a lot of money, but private sector cannot do so.
(iii) Benefit of the people :
The public sector has the benefit of the people above everything because its purpose is not to earn money but to benefit the people at all costs.
(iv) Benefit of the public especially :
The public sector is mainly held by the government which so often bears some of the cost for the benefit of the public especially for the poor people. People are given wheat, kerosene oil etc. at the lower prices than they buy from the market.
(v) Controlled by the government :
The public sector, mainly held and controlled by the government provides health and educational facilities free of cost or at the very nominal price.
(vi) Examples :
Railways, Post Offices, Steel Plants, Oil India are some examples of the public sector activities. From the above account it becomes quite clear that the public sector contributes to the economic development of a nations and that is why it is necessary to have the public sector. All public sector enterprises greatly contribute to the economic development of a nation.