Sectors of the Indian Economy Class 10 ||Economics|| Chapter 2 NCERT Notes
1. Sectors of Economic Activities
Economic activities are classified into three main sectors based on the nature of work:
(a) Primary Sector (Agriculture and Related Activities):
- Definition: This sector involves the extraction and utilization of natural resources directly from the Earth. It includes activities such as farming, fishing, mining, forestry, and animal husbandry.
- Importance: This is the most basic sector and forms the foundation of an economy, especially in developing countries.
- Examples: Agriculture, fishing, mining, etc.
(b) Secondary Sector (Industrial or Manufacturing Sector):
- Definition: This sector involves the processing of raw materials into finished goods through manufacturing. It includes industries that produce goods using raw materials from the primary sector.
- Importance: It adds value to natural products, turning them into something more useful.
- Examples: Textile manufacturing, automobile production, steel industry, etc.
(c) Tertiary Sector (Service Sector):
- Definition: This sector provides services to support the production and distribution of goods in the primary and secondary sectors, and also services that improve the quality of life.
- Importance: As economies grow, the demand for services such as transportation, banking, health care, and education increases.
- Examples: Banking, education, healthcare, transport, insurance, IT services, etc.
2. Comparing the Three Sectors
(a) Contribution to GDP:
- Primary Sector: Contributes less to the GDP in developed countries but a significant share in developing countries.
- Secondary Sector: Its share in GDP increases with industrialization.
- Tertiary Sector: This sector contributes the most to GDP in many developed economies.
(b) Employment:
- Primary Sector: In India, a large proportion of the population (nearly 50%) works in the primary sector, mainly agriculture.
- Secondary Sector: It absorbs less labor compared to the primary sector but provides more stable employment.
- Tertiary Sector: This sector has seen a significant rise in employment, especially in urban areas, as it offers a variety of jobs in services.
3. Historical Changes in Sectors
Over time, the importance of each sector changes with economic growth and development:
- Initially, the primary sector dominates (in terms of employment and production).
- With industrialization, the secondary sector grows in importance.
- With further development, the tertiary sector becomes dominant due to the rise of services.
In India:
- The tertiary sector has grown significantly in recent years, contributing the most to GDP, while the primary sector still employs the most people.
4. Rising Importance of the Tertiary Sector
The tertiary sector has grown in importance due to several reasons:
- Services in demand: As incomes rise, people demand more services like education, healthcare, and tourism.
- Development of Information Technology (IT): The IT and software industries have expanded rapidly.
- Support services: The tertiary sector provides services that support both primary and secondary sectors like transport, storage, banking, and trade.
- Globalization: India has become a hub for outsourcing services such as customer support, software development, and more.
5. Interdependence of Sectors
The three sectors are interdependent:
- Primary and Secondary: Without agricultural produce (primary), industries (secondary) would not have raw materials for production.
- Secondary and Tertiary: Industries depend on services like banking, transport, and insurance provided by the tertiary sector.
- Primary and Tertiary: Farmers need storage, transportation, and marketing services provided by the tertiary sector to sell their produce.
6. Disguised Unemployment in the Primary Sector
Disguised unemployment refers to a situation where more people are employed than necessary. This is common in the primary sector, especially agriculture in India.
- For example, in a family of five working on a small plot of land, only three may be needed, but all five work because alternative employment opportunities are not available.
7. How to Create More Employment
To address underemployment, especially in rural areas, steps can be taken:
- Diversification of agriculture: Promote activities like horticulture, fishing, and animal husbandry.
- Development of infrastructure: Investment in roads, transport, irrigation, and power can create more jobs.
- Promotion of small-scale industries: Encourage setting up small manufacturing units in rural areas.
- Expansion of services: Improve education and healthcare to employ more people in these sectors.
8. Organized and Unorganized Sectors
(a) Organized Sector:
- Includes enterprises where the terms of employment are fixed and employees receive benefits like pensions, health insurance, and paid leave.
- Examples: Government jobs, large industries, banks.
(b) Unorganized Sector:
- Comprises small and scattered units that operate on a small scale with no formal regulations. Workers in this sector do not enjoy any job security or benefits.
- Examples: Small shops, street vendors, agricultural labor.
9. Public and Private Sectors
(a) Public Sector:
- The government owns and controls enterprises, providing essential goods and services that may not be provided by private companies.
- Examples: Indian Railways, ONGC, BSNL.
(b) Private Sector:
- Enterprises are owned and controlled by individuals or companies. Their main objective is profit-making.
- Examples: Reliance, TCS, Infosys.
10. The Role of Government in Economic Development
- Public welfare: The government plays a key role in providing basic necessities like education, healthcare, and infrastructure.
- Regulation: It regulates the private sector to ensure fair competition and protect consumer interests.
- Employment generation: The government runs various schemes like MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act) to provide jobs, especially in rural areas.
11. Sustainable Development
Sectors of the economy should grow without harming the environment and depleting resources. Sustainable practices include:
- Using renewable resources
- Encouraging eco-friendly industrialization
- Reducing waste and promoting recycling
This chapter provides insights into the structure and functioning of the Indian economy, the classification of sectors, and the challenges faced, especially with respect to employment and the role of the government.