Table of Contents

Sectors of The Indian Economy – Chapter 2 Class 10 Economics (NCERT)

Sectors of the Indian Economy is Chapter 2 of Class 10 Economics (Understanding Economic Development). It explains how economic activities are classified into Primary, Secondary, and Tertiary sectors based on the nature of production. The chapter discusses the contribution of each sector to production and employment, the concepts of GDP, GVA, and final vs intermediate goods, and the problem of disguised unemployment. It also covers the difference between organised and unorganised sectors, the role of public and private sectors, and government initiatives like MGNREGA. This chapter helps students understand the interdependence of sectors and their role in India’s economic growth. Below are complete notes of this chapter aligned with NCERT, RBSE, and CBSE board exam patterns.

Sectors of Economic Activities

The activities which are conducted to earn money are called economic activities. To study them better, economists classify these activities into different sectors:

Based on Nature of Activities: Primary, Secondary, Tertiary.
Based on Work Conditions: Organised, Unorganised.
Based on Ownership: Public, Private.

Primary secondary and tertiary sector - Sectors of The Indian Economy

Primary Sectors

The sector which involves activities that directly use natural resources to produce goods is known as the Primary Sector.
The Primary sector is called primary because it provides the raw materials or natural resources that are essential for making other goods. It forms the base of secondary or teritary sectors.
Examples: Agriculture, Dairy, Fishery, Forestry and Mining.
It is also known as Agriculture and Related Industry because most of the natural products we get in primary sector are from agriculture, dariy, fishing, forestry.

Secondary Sectors

The sector which involves activities that change raw materials into finished goods through manufacturing is known as the Secondary Sector.
Examples: Cotton into yarn or cloth, Sugarcane into sugar or gur and Earth into bricks.
Since it is linked with industries and factories, it is also called the Industrial Sector.

Teritary Sector

The sector which involves activities that do not produce goods but support production in primary and secondary sectors is known as Tertiary Sector.
Tertiary Sector provides services instead of goods, hence it is known as Service Sector.
Example: Transportation, storage, communication, banking and trade.
Other services sectors involve teachers, doctors, lawyers, police, administrators, barbers, cobblers.
Modern services include internet cages, ATM booths, call centres, software companies etc.

Comparing The Three Sectors

Each sector produce goods or services and provides employment. To study the economy, we must know how much production happens and how many people are engaged in each sector.

Measuring Production in Different Sectors

To compare sectors, we cannot just count items, as they are unlike items. Instead, we measure production by the Value = Price x Quantity.
One Precaution During Value Determination: Not every good or services needs to be counted. Only final goods and services are included in calculation.
The final goods and services refer to those goods and services which are directly consumed by the consumers and are not meant for further production or processing.
Why are only ‘Final goods and services’ counted?
- Already included: 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.
- Avoid double counting: If counted separately, the same value would be added multiple times.
The sum of the values of all final goods and services produced in all the three sectors in a particular year is called Gross Domestic Product (GDP).
It shows the size of the economy.
In India, a central government ministry estimates GDP by collecting data on goods, services, and their prices from all states and union territories.
Now, the Indian Government shows the contribution of three sectors in terms of GVA (Gross Value Added) instead of GDP. (To be at par with global practices).
GVA measures the contribution of three sectors of an economy after adjusting for taxes and subsidies. GVA = GDP – Taxes + Subsidies.

Historical Change in Sectors

In the beginning, the primary sector was most important as most people were engaged in farming and natural products.
With the industrial revolution, the secondary sector (manufacturing) grew, factories came up, and people shifted from farms to industries.
In the last 100 years, the tertiary sector (services like transport, trade, IT, banking, education, health) became the largest contributor in developed countries.
So, the importance of sectors shifted from primary to secondary to teritary over time.

Primary, Secondary and Tertiary Sectors in India

If we compare sectorial data of past and present, it is clear that production grew in all three sectors. But, the production increased the most in the tertiary sector.
Teritary sector is largest producing sector in India replacing the primary sector.

Why service sector or tertiary sector grew fast in India?

Basic Services Requirement: With development, more schools, hospitals, banks, police stations, courts, transport, and administrative services were needed.
Support for Agriculture and Industry: Growth of primary and secondary sectors increased demand for services like transport, storage, trade, banking, and communication.
Rise in Per Capita Income: As people’s income increased, they started spending more on education, health, tourism, shopping, private schools and professional training etc.
IT and Communication Boom: In recent decades, new services based on information and communication technology (software, BPOs, call centres, digital banking, internet services) grew very rapidly in India.

Note: However, you must remember that not all of the services sector is growing equally well. There are a very large number of workers engaged in services such as small shopkeepers, repair persons, transport persons, etc barely manage to earn living. But they perform these services because no alternative opportunities for work are available to them.

Where are most people employed?

Most of the people in India are still employed in the primary sector, mainly in agriculture. Even though the share of agriculture in the country’s GVA has gone down overthe past forty years, its share in employment has not reduced at the same pace.

Why has the share of employment not shifted from the primary sector, even though its share in GVA has declined?

The main reason is insufficient job creation in the secondary and teritary sectors. Though industrial and service sector output increased rapidly, they did not generate enough employment. So,workers could not move out of agriculutre. For example, Industrial output (secondary sector) increased 9 times, but jobs created increased only 3 times. Service output (tertiary sector) increased 14 times, but jobs created increased only 5 times. As a result, a large share of workers cotinues to remain in the primary sector, mainly agriculture.

Underemploymet or Disguised Unemployment

Underemployment, where workers appear employed but are not fully utilized. It means more people are working than actually needed, so even if some workers leave, production does not fall. This type of underemployment Example: A small farm may need only 3 workers, but 5 memebers of the family work on it. The extra 2 workers are disguised unemployed because theri removal will not reduce output.

Underemployment in Other Sectors

Underemployment is not limited to agriculture, it also exists in other sectors. In urban area, thousands of casual workers search for daily employment. They may work as painters, plumbers, repair persons, or do other odd jobs, but many of them do not find work every day. Similarly, street vendors or cart pushers may spend the whole day working but earn vary little. They continue doing such work only because they do not have better job oppurtunities.

How to Create More Employment?

Irrigation and Water Access: Build wells, canals, dams to provide irrigation facilities. Farmers can grow a second and third crop, leading to more days of work per hectare.
Rural Infrastructure Development: Better roads, storage facilities, and markets make it easier to sell surplus produce. Creates jobs in transport, trade and marketing.
Affordable Credit to Farmers: Timely loans for seeds, fertilisers, and pumps raise productivity. Higher productivity increases the demand for more workers.
Agro-Processing and Rural Industries: Setting up agro-processing and rural industries like dal mills, cold storages, honey centres, and food processing units near farms creates non-farm jobs. This helps reduce dependence on agriculture and provide more employment oppurtunities.
Human Development Sectors: Opening more schools and hospitals. It creates jobs for teachers, doctors, nurses, and support staff while improving productivity of other sectors.
Tourism, Local Crafts, and IT Services: Promoting tourism, handicrafts, and IT-enabled services can create large numbers of jobs with proper planning and support.
Government Schemes: (MGNREGA 2005) Guarantees 100 days of wage employment in a year to all rural adults. If work is not given, people get unemployment allowance

Question: Why is MGNREGA 2005 called the ‘Right to Work’?
Answer: MGNREGA 2005 is called the ‘Right to Work’ because it legally ensures rural people either get employment or unemployment allowance.

Division of Sectors as Organised and Unorganised

Organised Sector

These sectors registered under the government and works under its supervision.
Follow rules and regulations and laws such as the factories act, minimum wages act, Payment of Gratuity act, Shops and Establishments act etc.
Jobs are regular and secure.
High and fixed wages.
Fixed working hours, overtime must be paid.
Paid leave, holidays, medical benefits, safe working conditions, provident fund, gratuity and pension after retirement.
Examples: Government offices, banks, schools, big factories etc.

Unorganised Sector

Made up of small and scattered units not registered under the government.
Rules and regulations are not followed.
Irregular and insecure jobs.
Low and irregular wages.
Now fixed working hours, usually no overtime pay.
No paid leave, sick leave, or holidays and no other benefits.
Examples: Street vendors, daily wage labourers, samll farmers, repair workers.

How to Protect Workers in the Unorganised Sector?

In India, most people work in the unorganised sector. Their jobs are low-paid, unsafe, and without benefits. They are often exploited, not given fair wages, and have no job security. Since there are fewer jobs in the organised sector, it is important to protect these workers.

Rural Workers: Landless labourers, small and marginal farmers, sharecroppers, and artisans (like weavers, carpenters, blacksmiths, goldsmiths) neet help. About 80% of rural families are small and marginal farmers. They must be supported with timely supply of seeds, fertilisers, credit, storage facilities, and proper markets so that they can improve farming and earn better.
Urban Workers: Workers in small industries, construction, transport, casual trade worker, rag pickers, street vendors etc. They should be supported by giving cheap raw materials, better markets to sell their goods, and protection through fair wages and secure jobs.

Sectors in Terms of Ownership: Public and Private Sectors

Public	Private
Government owns most of the assets and provide all the services. Example: Railways, post office, government school etc.	Private owner owns most of the assets and provides all the services. Example: Tata Steel, Infosys, private hospitals etc.
Main motive is to provide service	Main motive is to earn profit.

Why Must the Government Do Some Activities?

Big projects like highways, railways, dams, and power need huge money, which private companies cannot afford.
Government provides essentials at low cost, like cheap food grains through ration shops and electricity at fair rates.
Government must take care of people’s welfare by giving education, health, safe water, housing, and support to poor and backward regions.

Heredity

Class 10 Science

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