Understanding Economic Development PDF

## UNDERSTANDING ECONOMIC DEVELOPMENT ### **Economic Activities** We begin by looking at different kinds of economic activities. **Primary Sector (Agriculture):** * Produces natural goods. * Directly uses natural resources. * Examples include cultivation of cotton and dairy farming. * Depends on...

## UNDERSTANDING ECONOMIC DEVELOPMENT ### **Economic Activities** We begin by looking at different kinds of economic activities. **Primary Sector (Agriculture):** * Produces natural goods. * Directly uses natural resources. * Examples include cultivation of cotton and dairy farming. * Depends on natural factors such as rainfall, sunshine, and climate. * Products are natural, not manufactured. **Tertiary Sector (Service):** * Helps to develop Secondary sector. * Consists of activities that support production but do not produce goods themselves. * Example: Transport, storage, communication, banking, and trade. * Since these activities generate services rather than goods, this sector is also called the **service sector**. **Secondary Sector (Industrial):** * Produces manufactured goods. * Uses natural products from the Primary sector. * Examples include weaving cloth, making sugar from sugarcane, and building houses using bricks. * Gradually became associated with various industries, leading to the term **industrial sector**. #### **Examples of Economic Activities** **Example:** Imagine what would happen if companies decide not to buy cotton from the Indian market and import all their cotton from other countries. Indian cotton cultivation would become less profitable, and farmers might even go bankrupt. This scenario showcases the dependence of the secondary (industrial) sector on the primary (agricultural) sector. **What does this show?** * This is an example of the secondary or industrial sector being dependent on the primary sector. **Let's Work These Out**: 1. Complete the above table to show how sectors are dependent on each other. 2. Explain the difference between primary, secondary, and tertiary sectors using examples other than those mentioned in the text. 3. Classify the following list of occupations under primary, secondary, and tertiary sectors: * Tailor * Basket weaver * Flower cultivator * Milk vendor * Fishermen * Priest * Workers in match factory * Moneylender * Gardener * Potter * Courier * Bee-keeper * Astronaut * Call center employee 4. Students in a school are often classified into primary and secondary or junior and senior. What is the criterion that is used? Do you think this is a useful classification? Discuss. ### **Comparing the Three Sectors** * Tertiary sectors produce a very large number of goods and services. * There are a large number of people working in all three sectors to produce these goods and services * It's important to see how much is produced and how many people work in each sector. * One sector might be dominant in terms of total production and employment, while other sectors might be relatively small in size. #### **How do we count the various goods and services and know the total production in each sector?** * It's difficult to add up thousands of goods and services, but we can add up their values rather than adding up the actual numbers. * It's also important to include only the final goods and services. For example, a biscuits company buys flour, sugar, and oil to make biscuits. The biscuits are the final good, as they reach consumers, and their value includes the value of flour, sugar, and oil. #### **Why are only "final goods and services" counted?** * **Intermediate goods:** are used up in producing final goods and services. * The value of the final good already includes the value of all the intermediate goods used in making them. * It makes sense to only include the final goods and services in the total production count. ### **Historical Change in Sectors** * In the early stages of development, the **primary sector (agriculture)** was the most important since it produced most of the natural products and most people were employed in this sector. * As agriculture improved, people started taking up other activities, leading to the growth of the craft, trade, and service sectors. * As methods of manufacturing improved, the **Secondary sector** began to prosper and became more important. The demand for goods produced in factories increased, and more people shifted from the primary to the Secondary sector. * Over the past 100 years, the **Tertiary sector** has become the most important sector in developed countries in terms of total production and employment. #### **What is the total production and employment in the three sectors in India? Over the years, have there been changes similar to the pattern observed for developed countries?** ### **Primary, Secondary and Tertiary Sectors in India** * **Graph 1:** Shows the production of goods and services in the three sectors in India in 1973-74 and 2013-14. * **Rising Importance of the Tertiary Sector in Production:** From 1973-74 to 2013-14, production in all three sectors has increased but increased the most in the tertiary sector. As a result, in 2013-14, the tertiary sector has become the largest producing sector in India. #### **Why is the Tertiary sector becoming so important in India?** 1. **Services are essential:** Every country needs services like hospitals, schools, post offices, police stations, courts, village administration, defence, transportation, banks, insurance companies etc. The government takes the responsibility of providing these services. 2. **Development of other sectors leads to new services:** Development of agriculture and industries leads to the development of further services such as transport, trade, storage and so on. 3. **Rising income leads to demand for new services:** As income levels rise, people start demanding more services like tourism, entertainment, private hospitals, schools, and training etc. 4. **New technologies lead to new services:** In recent times, new services based on Information Technology like internet cafes, ATM booths, call centres, and software companies have become important. #### **Graph 2:** Shows the share of sectors in GDP (%) in India, 1973-74 and 2013-14. #### **Graph 3:** Shows the share of sectors in employment (%) in India, 1977-78 and 2017-18. #### **Why didn’t a similar shift out of the Primary sector happen in case of employment?** * Not enough jobs were created in the secondary and tertiary sectors. The **Primary sector** continues to be the largest employer. #### **Are there differences in employment between the organized and unorganized sectors?** * **Organized sector:** Offers secured jobs with regular salaries, benefits like paid leave, holidays, provident fund, gratuity, medical benefits, and safe working environment. * **Unorganized sector:** Offers low-paid, often irregular, jobs with no provision for overtime, paid leave, holidays, or leave due to sickness. Employees are vulnerable and risk losing jobs without any reason. #### **How to Protect Workers in the Unorganized Sector?** * **The unorganized sector needs protection:** Jobs in this sector are slow to expand, exploit workers with unfair pay, and lack security and benefits. * **Protecting vulnerable groups:** Workers in the unorganized sector need protection, especially in rural areas and urban areas, where a majority of workers come from scheduled castes, tribes, and backward communities. They are often vulnerable, and their work is irregular, making them susceptible to social discrimination. ### **Sectors in Terms of Ownership: Public and Private Sectors** * **Public sector:** Government owns the assets and provides all services. Examples include railways and post offices. * **Private sector:** Private individuals or companies own the assets and provide services. They are guided by the motive to earn profits. * **Why does the public sector need to exist?** Government needs to provide certain services that are essential for society but not profitable for the private sector. * **Examples:** Roads, bridges, railways, harbours, electricity, irrigation, health, education, and social welfare. * **Why is the government also involved in providing essential goods?** The government ensures the production and supply of goods such as providing electricity at affordable rates to maintain industrial production and buying wheat and rice from farmers at a fair price and selling it to consumers at a lower price. #### **Summimg Up** * Understanding the importance of the three sectors (primary, secondary, and tertiary) is key to analyze economic activities and their contribution to a country's GDP. * The unorganized sector in India is large, and most people are working in it. * The government plays an essential role in providing necessary services and protecting workers in both the unorganized and organized sectors. Public activities need to focus on certain areas, such as education, health, and social welfare. ### **Let's Work These Out** 1. Why do you think MGNREGA 2005 is referred to as "Right to work"? 2. Imagine that you are the village head. In that capacity, suggest some activities that you think should be taken up under this Act that would also increase the income of people. Discuss. 3. How would income and employment increase if farmers were provided with irrigation and marketing facilities? 4. In what ways can employment be increased in urban areas? ### **Division of Sectors as Organized and Unorganized** * **Kanta:** Works in the **organized sector**, which offers regular salaries and other benefits like medical facilities, paid holidays, provident fund, and gratuity. * **Kamal:** Works in the **unorganized sector**, which offers low-paid, irregular jobs without any benefits. #### **Let's Work These Out** 1. Look at the following examples. Which of these are unorganized sector activities? * A teacher taking classes in a school * A headload worker carrying a bag of cement on his back in a market * A farmer irrigating her field * A doctor in a hospital treating a patient * A daily wage labourer working under a contractor * A factory worker going to work in a big factory * A handloom weaver working in her house 2. Talk to someone who has a regular job in the organized sector and another who works in the unorganized sector. Compare and contrast their working conditions in all aspects. 3. How would you distinguish between organized and unorganized sectors? Explain in your own words. 4. The table below shows the estimated number of workers in India in the organized and unorganized sectors. Read the table carefully. Fill in the missing data and answer the questions that follow: | Sector | Organized | Unorganized | Total | |---|---|---|---| | Primary | 1 | 232 | 233 | | Secondary | 41 | 74 | 115 | | Tertiary | 40 | 88 | 128 | | **Total** | **82** | **394** | **476** | **Total in Percentage:** * What is the percentage of people in the unorganised sector in agriculture? * Do you agree that agriculture is an unorganised sector activity? Why? * If we look at the country as a whole, we find that \_\_\_% of the workers in India are in the unorganised sector. Organised sector employment is available to only about \_\_\_% of the workers in India.